Pensions FAQs

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Retirement income

Is my retirement income taxed?

Yes, any payments from an approved retirement fund (ARF), approved minimum retirement fund, vested PRSA and annuity are treated as income and taxed under the PAYE system. This means your payment may be liable to income tax, PRSI and Universal Social Charge. It’s important to allocate any available tax credits to your ARF or annuity. See our Guide to your payments for more information.

What is imputed distribution?

Each year, the Revenue apply a tax on an assumed withdrawal of a certain percentage from your approved retirement fund (ARF) and vested PRSA. This is known as imputed distribution. To facilitate this tax, we pay you a withdrawal in December, which is taxed under the PAYE system. The amount to be paid is calculated using the value of your policy on 30 November each year

The percentage is

  • 4%, if you're 60 years of age or over for the full tax year, or
  • 5%, if you're 70 years of age or over for the full tax year, or
  • 6%, if you've combined ARF and vested PRSA assets of €2 million or more, and aged 60 or over for the full tax year

Will my annuity payments increase?

Your payments will only increase if, at the time you bought the annuity, you chose to have your payments increase by a certain percentage each year. The increase would be applied each year on the anniversary date of your policy.

How do I make sure I’m taxed correctly?

It’s important to allocate any available tax credits to your approved retirement fund (ARF) or annuity provider to avoid being taxed at the emergency rate. See our Guide to your payments for more information.

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Pensions

Why do I need a pension?

You need your own pension because the state pension isn’t that generous.  The full single contributory state pension is less than €12,000 a year. Compare this to your salary now and the income you hope to live on when you retire. This is why you need your own pension.

What is a personal pension policy?

A personal pension policy is a Revenue approved contract set up with a life assurance company by a self-employed person to save for retirement. It can also be set up by an employee who does not have access to a pension scheme organised by their employer. Tax relief is available on contributions to the policy to encourage saving for retirement (within Revenue limits). The formal name for a personal pension policy is Retirement Annuity Contract.

What is a personal retirement savings account (PRSA)?

A PRSA is similar to a personal pension policy, designed by legislation to improve saving for retirement. It is a Revenue approved contract set up with a PRSA provider by an individual to save for retirement. Tax relief is available on contributions to the policy to encourage saving for retirement (within Revenue limits).

What is a buy out bond?

A buy out bond (also known as a personal retirement bond) is a policy where you can transfer your pension fund if you leave a company pension scheme or if the pension scheme is being shut down. The trustees set up the buy out bond for you and put you in control, so they don't have to be involved any more.

What is an executive pension plan?

An executive pension plan is a Revenue approved occupational pension scheme set up by an employer under trust to save for one or more employees retirement. Tax relief is available on contributions paid by the employer and employee to encourage saving for retirement (within Revenue limits).

Can I get tax relief on my pension contributions?

The amount of tax relief on your personal contributions to all pension arrangements is based on your age and your earnings.

Your age   
% of net relevant earnings*
Under 30
15%
30-39 20%
40-49 25%
50-54 30%
55-59 35%
60 or over 40%

* for the 2014 tax year, net relevant earnings are subject to a ceiling of €115,000 for the purpose of calculating tax relief.

How do I top up my pension?

Send us a cheque, together with your policy number and investment choice to:

Standard Life
90 St Stephen’s Green
Dublin 2

Is there a limit to how much I should put into my pension?

Yes, because if all your pension funds total more than €2m, you’ll have to pay an additional tax (41%) on the excess.  
If you have already taken a pension, talk to your financial adviser as the limits may be different.  If you buy an annuity and invest in an ARF, any payments from them will be treated as income and taxed under the PAYE system.

Is my Standard Life policy protected?

As Standard Life operates as a branch of our UK parent company, policies taken out since 1 December 2001 are covered by the UK’s Financial Services Compensation Scheme (FSCS) in the event that Standard Life is in default.
This means that if you have a Standard Life Synergy policy, your policy is covered by the FSCS which covers 90% of the claim, with no upper limit.

For more information, see Your policy is protected PDF (416KB)

Can I transfer my pension benefits to an overseas scheme?

Yes, if you’re a member of a company pension scheme or if it’s from a PRSA. You’ll need to get the receiving scheme to confirm that the pension benefits will be similar to what you are transferring from and it’s approved by the country’s pension regulator.

Can I cash in my pension policy?

Your pension is to provide for your retirement and you can’t normally cash it in before age 60. 

There are circumstances where you can retire as early as age 50.  This would normally require the approval of your employer and/or Revenue.
Where you are permanently unable to work or terminally ill, you may be able to retire at any time with the approval of Revenue and/or Standard Life.

What’s the earliest age I can take my pension?

Normally age 60, if you take early retirement from your employer (from age 50), you may be able to take your pension at the same time.  If you are in an occupation where early retirement is normal, the Revenue may allow you to take your pension as early as age 50.  If you are permanently unable to work due to serious illness or disability, you may be able to take your pension at any age.

When I take my pension, what tax do I pay?

Pension (annuity) payments are treated as income and taxed under the PAYE system.

When I retire, what is the maximum cash lump sum I can get?

25% of the value of your pension policy.

Taking all your pension arrangements into account, the first €200,000 cash lump sum is tax free.  The next €300,000 will be taxed at 20%.  Anything over €500,000 will be treated as income and taxed under the PAYE system.

 If you are a member of a company pension scheme, you have the option of taking a lump sum based on your salary and length of service instead.

 If you have already taken some pension benefits or are in a defined benefits scheme, then talk to your financial adviser as the limits that apply to you may differ.

What is the maximum pension that I can take?

If you have a personal pension or a PRSA, the maximum amount of pension depends on your policy value and annuity rates at the time.

If you are a member of a company pension scheme, it is 2/3rds final salary provided you have 10 years service to normal retirement age and you don’t have other pension benefits from other employments.

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Pension levy

What is the pension levy?

It’s an annual 'tax' imposed on the market value of your pension in each of the years 2011, 2012, 2013 2014 and 2015. It applies to all pension policies, for example, pension schemes, buy out bonds, personal pensions policies and PRSAs.

What are the principle features of the pension levy?

  • The levy is payable to the Revenue once a year at a rate of 0.6% for years 2011 to 2013. For 2014, it's 0.75% and 2015, it's 0.15%.
  • The value of the assets subject to the levy is the market value of the pension funds at 30 June each year
  • Standard Life is responsible for the managing the assets of pension schemes and policies with us, we deduct the levy and pay the Revenue

How is the levy calculated?

The levy is based on the market value of your pension on the 30 June each year and is based on the Transfer Value of policies before any early encashment are applied.

How will the levy be deducted?

The levy will be deducted by cancelling the appropriate number of units from your policy. The deduction will be proportioned according to the investment split within your policy.
For the portion of your policy invested in For Self Directed Options, the levy will be deducted from your policy cash account.

What type of policies does the levy apply to?

The levy applies to all company pension schemes, buy out bonds, personal pensions and PRSAs.

What products are exempt from the levy?

The levy does not apply to ARFs, AMRFs, annuity and vested PRSAs (PRSAs where the pension lump sum has been taken). Nor does it apply to savings or investment policies.

If I take my retirement benefits this year, will I be subject to this levy next year?

If you tke your benefits on or between 1 January and 29 June, there is no levy payable for that year.
If your policy is in force on the 30 June then the levy will apply and be deducted.

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