Directors – 3 reasons to use your company to provide for your retirement

If you are a director thinking about how you pay yourself, you might want to consider setting up a company pension plan and in particular a plan known as an Executive Pension Plan.

 

This kind of a pension plan provides a very tax efficient way of providing for the future retirement of the company directors.

 

Why? ... 

 

Whilst regular personal pension plans are always attractive from a tax viewpoint, an executive pension plan can be even more attractive. That is because the limits on the combined contributions to the executive plan are significantly greater than a personal pension plan. 

 

For example, a male aged 50 – potential combined contributions of up to 216% of their salary can be made into an executive plan. The maximum contribution under a standard, personal pension plan would be 30% of their gross salary. This is particularly interesting in a case where the company would not have had the cash reserves in the past to contribute to a pension for their director but now finds itself with significant cash reserves allowing it to make up for those years when contributions were not made.

 

Also, while there is an earnings cap of €115,000 for personal contributions, there is no cap for employer pension contributions, which allow the use of company monies to fund for a maximum projected pension of two thirds of your final salary and a maximum retirement fund of €2m.

 

 

There is the potential to get access to your pension pot at the age of 50 rather than 60.

 

 

Employer contributions effectively receive 52% tax relief as opposed to up to 40% on personal pension plan alternatives.

 

 

 

Our accountants can discuss your unique circumstances and help you decide the best way forward. For a free initial consultation call us today on 045 249 000 or make an enquiry via our online contact form