- What is a Self-Administered Scheme?
A Self-Administered Scheme is a tax efficient occupational pension scheme which is set up under trust for the benefit of a single member. It allows you and/or your employer to make contributions which are tax deductible. All Davy Self-Administered Schemes are approved by the Revenue Commissioners and registered with the Pensions Board.
- Who can take out a Self-Administered Scheme?
In order to qualify for a Self-Administered Scheme, you must be an employee or director of a company in receipt of Schedule E remuneration for income tax purposes.
- Who contributes to my Self-Administered Scheme?
Both you and your employer can contribute to your Self-Administered Scheme. As a condition of Revenue approval of the scheme, your employer is obliged to make a “meaningful” contribution.
- How much can I contribute to my Self-Administered Scheme?
The maximum contributions that can be paid to your scheme by you and/or your employer will depend on your personal circumstances, including company service and salary, and may be restricted by Revenue limits.
There is no limit to how much you can contribute but tax relief on contributions is restricted. Only contributions paid by you will be considered for the purposes of determining maximum contribution limits for tax relief purposes. You will receive full income tax relief at your marginal rate on contributions within the limits set out in the table below:
|
Age in Tax Year
|
Maximum contribution as a % of Net Relevant Earnings*
|
| Under 30 |
15% |
| 30 - 39 |
20% |
| 40 - 49 |
25% |
| 50 - 54 |
30% |
| 55 - 59 |
35% |
| Over 60 |
40% |
Source: Davy
The rate of 30% applies to certain specified occupations irrespective of age.
Your company can make contributions on your behalf. Such contributions are not subject to tax in the hands of employees and are not considered for the purposes of determining maximum personal contribution limits for tax relief purposes. The amount the company can contribute will depend on your company service and salary, and is usually in excess of the maximum personal contribution limits.
* Net Relevant Earnings: Earnings from a trade, profession, office or employment which are subject to income tax. Net relevant earnings are capped at €115,000 for 2012. (Part 30 of the Taxes Consolidation Act (TCA) 1997 as amended.) To the extent that you pay contributions in excess of the limits above, tax relief would be carried forward to future years.
- How can I make contributions?
You and your employer can make contributions to your Davy Self-Administered Scheme in the following ways:
- Electronic Fund Transfer (Ad hoc or Standing Order)
- Cheque or bank draft
- How often can I make contributions?
You can make a contribution at any point in time.
- Is there a maximum level of contribution?
There is a limit placed by Revenue on the maximum size of your pension fund, which is determined by your company service and salary.
The maximum contributions that can be paid to your scheme by you and/or your employer will depend on your personal circumstances, including company service and salary, and may be restricted by Revenue limits. You cannot make a contribution which would cause your fund to breach this limit. The amount of tax relief which can be claimed on personal contributions will be restricted to the standard age related contribution limits set by the Irish Revenue Commissioners (see “How much can I contribute to my Self-Administered Scheme?” for more information).
In addition, there is a restriction on the total amount of tax relieved pension funds that an individual can take from all pension arrangements, known as the Standard Fund Threshold. Currently this limit is set at €2.3 million (at January 2012).
- How much of my contribution is invested?
100% - there are no contribution charges.
- Can I transfer in other pension benefits?
Transfers can be accepted from other pension providers including;
- Other Occupational Pension Schemes
- Retirement Bonds
- Personal Retirement Savings Accounts ('PRSAs')
- Retirement benefits established outside of the State to the extent that transfers are permitted from that Scheme
- Can I transfer my Self-Administered Scheme out of Davy?
The full value of your Self-Administered Scheme is available to transfer to another pension provider such as;
- An Occupational Pension Scheme
- A PRSA (subject to certain restrictions)
- A Retirement Bond
- Retirement benefits established outside of the State to the extent that transfers are permitted to that Scheme
There are no charges for transferring your benefits out of the Self-Administered Scheme.
- When can benefits be taken?
You can normally start taking your benefits from age 60 (and up to age 70). In certain circumstances, you can take benefits earlier such as if you retire from employment at age 50 or over or if you can no longer work because of a serious illness or disability.
- What benefits are available when I retire?
The amount of available benefits on retirement depends on the level of contributions paid and the investment return earned on those contributions. The Davy Self-Administered Scheme offers flexible retirement options. You are entitled to the take benefits in one of two ways:
Option 1
- A once-off lump sum of up to one and a half times final salary* and
- The balance of the fund must be used to purchase an annuity
or
Option 2
- A once-off lump sum of up to 25% of the value of the assets* and
- The balance of the fund must be
- Transferred to an Approved Retirement Fund ('ARF')
*The first €200,000 of a lump sum is tax free and the next €375,000 is subject to tax at the standard rate (20% at January 2012). The maximum tax-free lump sum is subject to the limits applicable to your occupational or statutory scheme and limits set down by the Revenue Commissioners.
- What benefits are payable on my death?
The value of your fund at death may be used to provide the following benefits:
- A tax free lump sum of up to four times final salary is payable to your Estate, and/or
- The balance of the fund is used to secure an annuity for your spouse or dependants
- What are the charges?
- There are no set up charges
- There are no contribution or transfer charges
- There is an annual management fee.
- Share dealing commissions and charges will apply to the purchase and sale of securities.
Please refer to the Self-Administered Scheme pack for further details.
Please refer to the
Glossary for definitions of terms contained in this section.