The pensions landscape continues to evolve.  With further changes introduced in the Finance Act 2011, it may be timely to consider whether your company’s scheme (or your own personal arrangement) needs to adapt to these changes in light of increased employer cost of pension provision and the current economic environment.  We set out below some actions that both employers and those who have pension benefits might consider at this time. 

Employers:

• Ensure systems have been changed to collect (and return to Revenue) the correct monthly Universal Social Charge (USC) and PRSI contributions under the new rules
• Consider whether pension scheme explanatory booklets and other employee communications need to be updated
• Engage in an overall review of staff pension and benefit reward structures.  This could take account of changes in pensions and changes in the taxation of share based remuneration

Employees and other pension holders:

• The maximum allowable pension fund from a tax perspective has been reduced to €2.3 million (the new Standard Fund Threshold).  Those with a greater entitlement on 7 December 2010 can protect this pension value by providing details to Revenue before 7 June 2011. This will impact on those who were entitled to a pension fund exceeding €2.3million and/or an annual defined benefit pension exceeding €115,000 on 7 December 2010
• Consider carefully the various pension structures to ensure you have an arrangement which suits your circumstances
• Don’t forget the importance of your pension fund as part of your overall assets.  Ensure it is fully considered as part of any planning around inheritance tax/succession planning

Contributed by Niamh Keogh.