|The Association of Pensioneer Trustees of Ireland is a representative body for pensioneer trustees in Ireland. Pensioneer trustee is a status conferred by the revenue commissioners on individuals or firms with specialist knowledge in the area of pensions law and pensions administration.
It is a Revenue requirement that a pensioneer trustee be appointed as a trustee in relation to all self-administered pensions. The role of the pensioneer trustee typically involves the establishment and administration of self administered pensions. Their formal responsibilities include ensuring such pensions operate in accordance with the requirements of the Revenue Commissioners and the Pensions Acts 1990-2002.
Since the mid seventies, company directors and employees have been able to establish pensions, which give them control over their investment funds. These are known as Self Administered Pensions (SAPs). These pensions continue to be the most transparent and flexible pension arrangements available. SAPs are established as trusts and the members, the employees, are the trustees. In addition, it is a Revenue requirement that a professional trustee, known as a Pensioneer Trustee, is appointed.
The trust document and the rules of the SAP must be in accordance with Revenue requirements that additionally approve each SAP and grant it “exempt approved status”. This confers the same tax benefits to those which pertain to institutional pension arrangements. The company makes contributions on behalf of the members. The individual can make personal contributions, again similar to typical institutional pension schemes. Unlike most pension arrangements there is no requirement to make regular contributions. This means the company may make contributions when profits and cash flow allow.
The maximum contribution must be agreed in advance with the Revenue. Perhaps the greatest benefit to the SAP member is the ability to control investments. In addition to quoted equities, gilts, collective investments and cash deposits, allowable investments include land, commercial and residential property and investments in private companies.
Some restrictions do apply to investments.
- No self-dealing.
The SAP cannot buy, sell or let to the member, the company or related practice.
- No “pride in possession” investments.
These would include tangible, moveable property such as fine art or vintage cars. There is no tax liability on the investments within the SAP. As in other pension arrangements, the SAP is exempt from both income and capital gains tax. Again, as in other pension arrangements, on retirement most SAP members can access an approved retirement fund (ARF). This will allow them to receive 25% of the fund as immediate tax free cash. On death the balance of the fund can be passed to the member’s next of kin subject to a maximum of 20% tax.
What Advantages does a SAP have over Traditional Pensions?
Control: The member decides on how and where to invest; The member can exercise the greatest degree of investment choice possible.
Transparency: In the vast majority of cases, Pensioneer Trustees charges fees for their services
Flexibility: There is no obligation to make fixed contributions. Unlike many traditional insurance company pensions there are no financial penalties if you reduce your contribution or fail to make a contribution in any given year.