employers guide to a group retirement plan
DESCRIPTION
In today’s competitive business environment, employee benefits are becoming increasingly important in attracting and retaining the best people. A good pension plan can form an important part of any remuneration package in actively encouraging employees to consider a long-term future with your company.TRANSCRIPT
Employers Guide to a Group Retirement Plan
2 Thomond Asset Management
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Contents01.01
Ataglance
WelcometoThomondAssetManagement
Helpingyouremployeesplanforacomfortableretirement
WhyThomondAssetManagement’sGroupRetirementPlan?
Extensivebenefitsforbothyouandyouremployees
DesigningyourGroupRetirementPlan
Taxbenefits
Investmentoptions
OtherFunds
Retirementoptions
Protectionoptions
Plandetailsandcommunications
Frequentlyaskedquestions
Nextsteps
AboutUs
Employers Guide to a Group Retirement Plan
3 Thomond Asset Management
Objective
Cost
Service
Tax relief
Investment
Risk
Employee
Retention
Ataglance01.02
*Subjecttorevenuelimitsandapproval.
Astraightforwardpensionoptionforyouand
youremployees
Competitiveandtransparentcharges
Tailoredmemberservice
Onlineaccesstoviewplanforboth
employerandemployees
Employercorporationtaxreliefof12.5%
oncontributions*
EmployeetaxandPRSIreliefoncontributions*
Trusteeindemnityfrommemberfundselection
Widerangeofinvestmentfundsandmanagers
ThomondAssetManagementhelpsemployers
managetheirriskthrough:
• Trusteeindemnityfrommemberfundselection
• Approvedtrusteetrainingandsupport
• Corporatetrusteeservicetotakeresponsibility
fortrusteerole
Acompanypensionplanisavaluableemployee
benefitmakingyourcompanyanemployerofchoice
Employers Guide to a Group Retirement Plan
4 Thomond Asset Management
02.01 WelcometoThomondAssetManagement
A philosophy centred on client relationships. As one
of Munster’s most dynamic Wealth Management
companies, our aim is to provide our clients with
greater financial independence, security, and
peace of mind. To deliver on our commitment to
growing your wealth in a progressive yet secure
manner, we have assembled a team of dedicated
and accountable professionals with decades of
experience in all aspects of wealth management.
Our highly qualified and experienced directors and
portfolio managers understand that you‘ve worked
hard to grow your wealth and that you need an
organisation that understands your needs.
When founded, Thomond Asset Management did not
follow the path of our peers, a transaction-oriented
style of business based simply on “selling”products.
Instead we stress the importance of counselling
individual clients,understanding their needs and
concerns, and building customised financial plans.
Today, Thomond Asset Management continues to
embrace this philosophy,encouraging our clients to
focus on long-term investing and develop diversified
portfolios. Our objective is to help people plan for
life. Remaining sensitive to the changing needs
of our clients, we keep a watchful eye on today’s
complex financial marketplace and we offer a
comprehensive selection of wealth management
solutions to help meet our clients’ evolving needs.
We are dedicated to providing clients with complete
financial planning services and personalised,
professional assistance. Simply put, we believe our
business is people and their financial well-being.
Only when your specific expectations are met or
exceeded do we consider our result a success.
Employers Guide to a Group Retirement Plan
5 Thomond Asset Management
Importantinattractingandretainingthebestpeople
03.01Helpingyouremployeesplan
foracomfortableretirement
In today’s competitive business environment,
employee benefits are becoming increasingly
important in attracting and retaining the best
people. A good pension plan can form an important
part of any remuneration package in actively
encouraging employees to consider a long-term
future with your company.
While there is a legal requirement to provide
employees with access to some form of pension
provision (standard PRSA), you are not required to
make a contribution on behalf of an employee.
Instead of just providing a standard PRSA facility,
many employers are now taking the opportunity to
set-up some form of company pension plan to help
their employees save for retirement.
There are two company pension plan options
available to employers, a defined contribution Group
Retirement Plan or Group PRSA arrangement,
both of which are available from Thomond Asset
Management
This brochure will explain how a Group Retirement
Plan works, your obligations as an employer and the
benefits available to you and your employees.
Employers Guide to a Group Retirement Plan
6 Thomond Asset Management
Thomond Asset Management’s Group Retirement
Plan is a company pension plan, which offers a tax
efficient, flexible and accessible way to provide
financial security for your employees in retirement.
As Thomond Asset Management’s Group
Retirement Plan is a defined contribution plan, it
allows employers to take control of their pension
costs by contributing a defined percentage of
their employees’ salaries to their retirement fund.
Usually the employee also makes a contribution to
their retirement fund at the same time, facilitated
by payroll deduction.
We will guide you through the setting up process,
help you decide the contribution level that best
suits you, and assist you in selecting appropriate
investment funds.
ATaxefficient,flexiblewaytoplanforyouremployee’sretirement
04.01WhyThomondAssetManagement’s
GroupRetirementPlan?
Employers Guide to a Group Retirement Plan
7 Thomond Asset Management
05.01Extensivebenefitsforboth
youandyouremployees
Benefitstotheemployer
Valuable Employee Attraction & Retention Tool Thomond Asset Management’s Group Retirement
Plan is a tax efficient way of rewarding your
employees for their service. Employers who make
a contribution to their employees’ pension benefit
from the valuable staff incentive, recruitment and
retention advantages it provides.
Tax Relief You also benefit from tax relief on any contributions
that you make to your employees’ pension plan
as these can normally be fully offset against
Corporation Tax as a business expense.
Investment Options You have the option of choosing from a wide range
of pension investment funds from over 14 fund
managers both national and international. This
Investment Solution offers your employees the
opportunity to choose from a range of investment
funds and strategies for their pension.
Protection Options Thomond Asset Management’s Group Retirement
Plan also allows you to avail of additional plan
benefits such as Life Cover, and Disability Cover.
(Subject to Terms & Conditions.)
Pension Scheme Online Thomond Asset Management’s Pension Online
service is a password-protected website which
enables you to easily monitor your company’s
Group Retirement Plan and where you and your
employees can view up to date information on their
pensions, including contributions paid to date,
individual fund values and choice of funds.
Employers Guide to a Group Retirement Plan
8 Thomond Asset Management
05.02
Benefitstoemployees
Extensivebenefitsforboth
youandyouremployees(continued)
Security Your employees will have the security of a pension
without having to arrange or administer the Plan
themselves.
Tax Relief Employees can normally avail of generous tax
relief on their contributions, tax-free growth on
their investment, and a tax-free lump sum at
retirement.
Retirement Options On retirement your employees can choose from
two options in terms of how they wish to benefit
from their retirement fund.
Pension Scheme Online Your employees can also avail of Thomond Asset
Management’s Pension Online service, which will
provide them with up to date information on their
pension funds.
Employers Guide to a Group Retirement Plan
9 Thomond Asset Management
When you set up a Group Retirement Plan, you
can design the Plan to suit your own needs and
circumstances. The issues that you need to
consider include the following:
Contribution Options One of the most important aspects to consider is
the level of contributions that you pay on behalf of
your employees. Most company pension schemes
operate on a full contributory basis where both
the employer and employee contribute a fixed
percentage of basic annual salary. A typical
contribution level for employer and employee
would be 5% each of basic annual salary.
Normal Retirement Age Every Group Retirement Plan must set a Normal
Retirement Age between the ages of 60 and 70.
In Ireland, most company pension plans set this
age at 65 years. This ties in with the state pension
which starts at 66 presently.
Eligibility Conditions As an employer you can decide the conditions that
must be met before an employee joins the Plan. For
example,employees could join the Plan once they
are over a certain age and have one year’s service.
Compulsory or Voluntary Membership You can decide to make membership of the Plan
compulsory for new employees. This means all new
employees must join and, if applicable, contribute
to the Plan. Alternatively they may be given the
option of whether they wish to join the plan. Any
existing employees must be given a choice as to
whether or not they join the Plan.
Additional Voluntary Contributions (AVCs) Thomond Asset Management’s Group Retirement
Plan provides the facility to enable members make
extra contributions (AVCs) to provide themselves
with additional retirement benefits. AVCs are
subject to the same tax relief rules and Revenue
limitations as normal employee contributions to
the Plan. Employees can avail of new retirement
options in respect of their AVCs.
Trusteeship In order to qualify for the valuable tax benefits
available, a defined contribution Group Retirement
Plan must meet certain conditions and in
particular the plan must be established under
Trust. In establishing your Group Retirement
Plan under Trust, it is necessary for Trustees to
be appointed and there are a number of options
available to you in this regard.
Tailoredtosuityouandyouremployees’needs
06.01 DesigningyourGroupRetirementPlan
Employers Guide to a Group Retirement Plan
10 Thomond Asset Management
The options available to you are:1. The employer can act as the Trustee of the
Group Retirement Plan and this tends to
be normal practice in small to medium size
pension schemes.
2. Individual Trustees can be appointed and can
include the senior management of the
employer as well as an employee.
3. A Corporate Trustee may be appointed.
4. Where there are more than 50 members in a
defined contribution Group Retirement Plan,
the plan members are entitled to elect 50% of
the Plan’s Trustees.
Trustee Training It is important to note that recently introduced
legislation requires Trustees to receive formal
training in relation to their duties and obligations
and this training will need to be carried out every
two years.
General Investment Trust Thomond Asset Management offers a Corporate
Trusteeship facility. This service can reduce the
potential risks facing company directors because
the Trustee role is taken over by a professional
trustee company.
This means that directors of the company:• Do not require Trustee training.
• Are not liable for potential Pensions Board
Trustee fines.
• Do not have any Trustee responsibilities under
the Pensions Act. Ongoing Trustee support
to employers is provided to enable them to
understand and comply with all of their pension
obligations.
Tailoredtosuityouandyouremployees’needs
06.02 DesigningyourGroupRetirementPlan(continued)
Employers Guide to a Group Retirement Plan
11 Thomond Asset Management
Both you and your employees can enjoy
considerable tax relief on contributions made to
the Group Retirement Plan, subject to Revenue
limitations.
Employer tax advantages Your payments to the Plan can normally be fully
offset against Corporation Tax as a business
expense. The net cost of a company contribution of
€1,000 is effectively €875.* This makes the Plan a
tax efficient way of rewarding employees.
*Note: Based on 12.5% Corporation Tax rate for
non-manufacturing companies.
Employee tax advantages• Employer contributions to the Group
Retirement Plan are not considered Benefit In
Kind (BIK), and are not classified as part of an
employee’s income.
• Unlike other savings methods, your employees’
pension fund will grow free of Income Tax and
Capital Gains Tax.
• At retirement, part of your employee’s
accumulated fund can be taken in the form of a
tax-free lump sum.
• If an employee makes a contribution to the
Plan, he/she can benefit from Income Tax
and PRSI relief (subject to Revenue maximum
limits). In the case of regular contributions,
deductions will be taken directly from the
employee’s gross salary, thereby allowing tax
and PRSI relief at source.
07.01 Taxbenefits
Taxreliefforyouandyouremployees
Employers Guide to a Group Retirement Plan
12 Thomond Asset Management
08.01 Investmentoptions
Thomond Asset Management Investment Choice solution offers:1. Trustee indemnity from fund selection
responsibility provided certain conditions are met.
2. Choice – we offer a wide range of funds from
which you can tailor an investment choice to offer
to your employees.
3. Flexibility – members can pick from a suite
of pre-selected pension investment funds.
1. Why investment choice is so important One of the most important factors that will
affect the success of your employees’ pension
is the investment return that is earned on the
contributions. Contributions to the pension are
invested in order to build up a fund that your
employees can use to provide benefits when
they retire including a pension and tax-free lump
sum. The rate of return earned on both your
contributions and your employees’ contributions
directly affects the size of their fund when they
retire – even an extra 1% p.a. investment growth
can make a significant difference in the long-term.
That’s why choosing the right fund in which
to invest both you and your employee pension
contributions, can make such a difference to the
success of your employees’ pension. As a trustee
you can decide where pension contributions are to
be invested, or as is becoming the norm, you can
offer employees a range of funds from which they
can select.
2. Member Investment Choice Thomond Asset Management have designed a
suite of funds which Trustees can offer to scheme
members. These funds provide members with a
wide range of investment managers and allow for
different attitudes to risk.
3. Default Investment Strategy While it is important to offer a choice of funds,
in some cases your employees may not wish to
make an investment decision. To cater for this it
is necessary for a company pension plan to have
a default investment strategy. If your employees
do not select an investment fund then their
contributions will automatically be invested in
the default investment strategy.
Tailormadeinvestmentoptions
Employers Guide to a Group Retirement Plan
13 Thomond Asset Management
09.01 OtherFunds
Other funds?While the standard default strategy will meet the
needs of most trustees and members, Thomond
Asset Management also offers access to funds
from 14 different investment managers for you
to choose from. This extensive fund range caters
for all investors preferences and attitudes to risk
including regional equity, indexed funds and ethical
funds.
Employers Guide to a Group Retirement Plan
14 Thomond Asset Management
Whenyouremployeesretire,theycan
usetheirretirementfundineitheroftwo
ways:
Retirementoptions10.01
Taking Benefits• Your employees will usually retire at the
Normal Retirement Age you have set for the
Plan.
• Employees, with your consent, can also retire
early or late between the ages of 50 and 70.
Option 1 They can take a tax-free lump sum of up to a
maximum of 1.5 times their final salary (depending
on their service) and then use the balance of their
fund to buy a Pension.
Option 2 They can use their entire fund to buy a Pension
(called an Annuity) which provides a regular secure
income, paid for the rest of their lives. Employees
who make Additional Voluntary Contributions
(AVC’s) to their retirement fund or a 5% Proprietary
Director will have additional options available to
them at their retirement.
Which option is best for my employees? Your employees don’t have to choose which option
suits them best now. The important thing is that
they have built up a sufficient fund to enable
them to enjoy their retirement. We recommend
that your employees speak to their Thomond
Asset Management Adviser when thinking about
retiring and he/she will advise them on the options
available.
Employeeretirementoptions
Employers Guide to a Group Retirement Plan
15 Thomond Asset Management
You can also decide to provide protection benefits
for employees. This can include life cover,
a spouse’s pension and disability cover.
Life Cover A life assurance benefit is frequently included as
part of a Group Retirement Plan. Depending on
the age profile of your workforce, this can be a
relatively inexpensive benefit to provide and will
be highly valued by your employees. Most life cover
policies will simply provide a lump sum payment
on death. Under current Revenue guidelines it is
possible to provide a lump sum of up to 4 times
a person’s salary on death. It is also possible
to provide additional pension benefits for an
employee’s dependants.
Disability Cover (Income Protection) The objective of disability cover is to provide an
income, after an initial period, to an employee who
is totally unable to pursue their normal or a similar
occupation as a result of long-term illness or
injury, while not engaged in any other occupation.
A typical disability benefit would be two-thirds of a
person’s salary less the benefit they would receive
from the State.
Premium Protection Cover This benefit is designed to pay your employee’s
pension contributions plus life cover premiums, if
any, after an initial period, should they be unable to
work due to illness or injury. Any AVC contributions
your employee is making will not be covered
under this benefit. Disability Cover and Premium
Protection Cover are provided under a separate
arrangement with the employer. If you would
like more information on any of these Protection
Benefits, please speak with your Thomond Asset
Management Representative.
Protectionoptions11.01
AdditionalBenefitsforyouremployees
Employers Guide to a Group Retirement Plan
16 Thomond Asset Management
A pension is a long term investment and your
employees will need to review their Plan regularly
as to the retirement fund they will need. We
recommend that your employees review their
pensions at least once a year, especially if their
circumstances change.
Pensions Online Thomond Asset Management’s Pension Online is
a password protected website, where you have
instant access to your scheme’s information
including membership details, payments history
and members’ pension accounts.Because our
Pension Online service is interactive, you can also
use the website to update member’s salaries, or
notify us when a member is leaving service. In
addition, you can allow members of your Group
Retirement Plan to view up to date information on
their individual pension accounts.
Employer Benefits• Immediate access to your scheme
details online.
• Enables you to view your employees up
to date pension account details.
• Ability to update your employees’ salary
details in a more efficient manner.
• Easily allows you to notify us when an
employee leaves service.
• You can view information on the
payment history of the scheme.
Employee Benefits• It provides your employees with up to date
information on their pension accounts,
such as contribution history, fund value and
choice of funds.
• It is easy to use.
Plandetailsandcommunications12.01
Makingiteasytotrackyourfund
Employers Guide to a Group Retirement Plan
17 Thomond Asset Management
12.02
Annual Benefit Statements Thomond Asset Management will produce annual
benefit statements for each member to allow them
to monitor the progress of their retirement fund.
The statements will show:• Contributions paid in respect of each member
over the previous year.
• Details of any life cover and disability benefit.
• Current value of the employee’s plan.
• A projection of the estimated benefits that the
employee will receive at retirement.
Annual ReviewAn annual review date will be agreed for your Plan
to ensure that all data in relation to membership is
fully up to date.
Trustee Annual Report Thomond Asset Management will also produce a
draft Trustee Annual Report to assist the trustees
of the Plan comply with their obligations. This
will show the total contributions paid during
the previous year together with an investment
report showing how the funds in which the Plan is
invested have performed during the year.
Plandetailsandcommunications(continued)
Plancommunications
Employers Guide to a Group Retirement Plan
18 Thomond Asset Management
13.01
What happens if an employee leaves my employment? If an employee leaves your employment before
Normal Retirement Age, there are a number of
options available to them concerning their pension
rights, as laid down under the Pensions Acts 1990
(as amended). The options available to an employee
depend on the length of time they have been a
member of the Group Retirement Plan. If they have
been a member of the scheme for less than 2 years,
then their only legal entitlement will relate to the
value of their own contributions. Members of more
than 2 years will be entitled to the value of both the
employer contributions and their own contributions
to the Plan.
Will my employees be eligible for the State Pension if they contribute to a Group Retirement Plan? The State Contributory Pension will not affect
benefits received from the Group Retirement Plan.
All employees who have made the required number
of Social Insurance contributions will qualify for the
State Contributory Pension.
What happens if an employee dies before they retire? The value of an employee’s pension fund becomes
payable on death before retirement. This is in
addition to any life cover benefit that may be
payable under the Plan.
Frequentlyaskedquestions
EnsuringPeaceofMind
Employers Guide to a Group Retirement Plan
19 Thomond Asset Management
Nextsteps14.01
As you are already aware, you are now required
by law to provide your employees with access to a
suitable form of pension provision.
With the introduction of the National Pensions
Framework more people are becoming pension
conscious, making the Group Retirement Plan
an even more powerful aid to recruiting the high
quality staff your business needs. It gives your
employees one less thing to worry about, and one
more reason to join or remain with your company.
We recommend you speak with your Thomond
Asset Management Representative, who will
ensure that you have all the relevant information to
make a considered and educated decision that best
meets your needs and the needs of your employees.
Employers Guide to a Group Retirement Plan
20 Thomond Asset Management
Thomond Asset Management82 O’Connell Street
Limerick
Tel: 061 462024
Fax: 061 312033
Email: [email protected]
www.thomondam.com
Regulatory Status with the Central Bank of Ireland
FOLK Asset Management Ltd. t/a Thomond Asset Management (“the Firm”) is regulated
by the Central Bank of Ireland as an Authorised Advisor under Section 10 of the Investment
Intermediaries Act, 1995 and as an insurance intermediary registered under the European
Communities (Insurance Mediation) Regulations, 2005. The Central Bank holds registers of
regulated firms. You may contact the Central Bank on (01) 224 4000 or alternatively visit
their website on www.financialregulator.ie to verify our credentials. Our Investment Firm
Intermediary Number is C52926.
Disclaimer This document does not constitute an offer and should not be taken as a recommendation from Thomond Asset Management. Advice should always be sought from an appropriately qualified professional.
The case studies are not real people and are for illustration purposes only.
Whilst great care has been taken in its preparation, this newsletter is of a general nature and should not be relied on in relation to specific issue without taking appropriate financial, insurance or other professional advice. The information contained in this newsletter is based on our understanding of current and intended legislation and Revenue practice as at September 2011.
Warning: - The income you get from an investment may go down as well as up. - The value of your investment may go down as well as up. - Benefits may be affected by changes in currency exchange rates. - Past performance is not a reliable guide to future performance
AboutUs15.01