Pensions Reform Tony Gilhawley FSAI Director Technical Guidance Ltd. For Financial Broker Use Only

Transcription

1 Pensions Reform Tony Gilhawley FSAI Director Technical Guidance Ltd. For Financial Broker Use Only

2 Another priority is to ensure that more people in work make provision for decent pensions when they retire. This issue has been longfingered for too long, and now that the economy is recovering strongly we must act decisively, and we will publish a five year roadmap for pension reform before the end of the year. 22 nd September 2017

3 This will include introduction of an autoenrolment pension scheme for private sector workers, two-thirds of whom currently have no occupational pension to supplement their state pension. I anticipate the first payments being made into those new individually held funds by nd September 2017

4 2010 It is intended that the auto-enrolment scheme will be introduced in 2014 but only if it would be prudent given the economic conditions prevailing at that time.

5 It is the Authority s view that changes to the current system are needed in order to address the existing shortcomings so that pension savers better understand their pensions and the decisions they need to make and achieve better value for money.

6 Too many products Too many schemes High charges

7 PRSAs ARFs Large group schemes

8 PRSAs RACs Buy Out Bonds Now One member schemes

9 PRSAs RACs Buy Out Bonds After P day One member schemes

10 Transfers: now PRSA ARF option Scheme PRB ARF option Salary/Service option

11 Transfers : after P day 15 yr service limit abolished Scheme PRSA ARF option Cert of Benefit Comparison?

12 Transfers: now PRSA ARF option Scheme PRB ARF option Salary/Service option

13 New transfers to be allowed PRB PRSA RAC Scheme

14 Upheaval in the transfer market

15 Individual self employed: now RAC Self employed PRSA

16 Individual self employed: after P day Self employed PRSA

17 Individual self employed: now RAC Self employed PRSA

18 One of the objectives of the Authority s proposals is to reduce the number of pension schemes. This means that there will be a greater role for master trusts occupational schemes whose contributing members may be employees of unrelated employers.

19 Future for one member Exec schemes?

20 New one member schemes may have to join a master trust Co A Co D Master Trust Co B Co C

21 PRSA New one member schemes may have to use a PRSA structure

22 Special provisions may be required for single member schemes set up before September 2018

23 Existing one member schemes may find it difficult to continue without joining a master trust Co A Co D Master Trust Co B Co C

24 Maximize one member scheme funding potential now

25 The ARF market

26 Individual ARF contracts Scheme ARFs (SCARFs) Group ARF structures

27 Changes to the ARF option? Current Possible? AMRF: 63,500 AMRF: 10 x State Pension = 125,000 12,700 income test 1.5 x State Pension income test = 19,000 pa

28 The AMRF may become more common than the ARF

29 The need for personal advice

30 This will include introduction of an autoenrolment pension scheme for private sector workers, two-thirds of whom currently have no occupational pension to supplement their state pension. I anticipate the first payments being made into those new individually held funds by 2021.

31 Private Pension coverage

32 Auto Enrolment Scheme (AES)

33 Auto enrolment: Two possible approaches Public Private Collected through PRSI system Providers collect contributions Public service administration Private sector administration Invested in private funds Invested in private funds

34 Employee: 4% 8% Employer: 2% Contributions Tax credit: 2%

35 8% Tax credit: 2% Employee: 4% Employer: 2% The floor and ceiling for contributions will be decided closer to the date of introduction of the auto-enrolment scheme and they will be set in such a way to ensure that the scheme targets lower and middle income earners 7,000 50,000

36 The possible knock on effects of Auto Enrolment Scheme Pension tax relief Tax credit? Retirement options Benchmark charges Benchmark investment fund options

37 PRSAs ARFs Large group schemes

38 Upheaval in the transfer market

39 Future for one member Exec schemes?

40 Individual ARF contracts Scheme ARFs (SCARFs) Group ARF structures

41 The need for personal advice

42 Pensions Reform Tony Gilhawley FSAI Director Technical Guidance Ltd. For Financial Broker Use Only This presentation based on understanding of the current laws and practice. While great care has been taken to ensure the accuracy of the information it contains, we cannot accept responsibility for its interpretation, nor does it provide legal or tax advice.