Retirement Planning:

The Insured Executive Retirement Plan

Executive Pension Plans are taken out by employers to provide retirement benefits for executives and key employees. They are set up under trust. The employer normally acts as trustee. Both employer and employee can make contributions, but it is a Revenue requirement that the employer must make a meaningful contribution on an ongoing basis.

An Insured Executive Retirement Plan is a pension structure held within a life assurance company and is available to company owners and employees. The main benefits of these types of retirement plans are as follows:

  • Tax relief on contributions: There is full tax relief on employer contributions meaning that the employer company receives tax relief against corporation tax and the contribution is free from income tax and levies for the employee. The employee can also make personal contributions to the plan from income tax within certain limits.
  • Attractive tax free investment growth: The fund in which contributions are invested benefits from tax free investment growth unlike most other saving methods which may be liable for tax.
  • Tax Free Lump: At retirement the holder draw down a lump sum from the fund. This can be 25% of the fund as a tax free lump sum at retirement or in some cases 1.5 times final salary.
  • Protection of funds: As retirement plans are set up under trust they are held entirely separate from the trading activity of the employer therefore providing a legal protection for the employee’s funds.
  • Life Cover: Life cover benefit can be provided within these structures in a tax efficient manner whereby premium costs can be paid from the pension fund with tax free money.
  • Funds: There is access to a diverse range of funds facilitated by that life company.
  • Large contribution levels:  Executive retirement plans allow for a significantly greater levels of pension contributions than personal pension structures as both company and personal contributions can be made to the plan.
  • Business Exit Planning: They can enable the holder to extract funds from a company without any income tax liability.
  • Estate Planning: They allow for the potential transfer of assets to next of kin in a tax efficient manner.