Can I move a Life Assurance investment directly into a pension

SPC100

Registered User
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I have an investment in AXA financial that I will have to encash, as they are closing their business. See this thread for more details.

I will lose a very substantial amount in tax as a result of this encashment. I don't need this money for the foreseeable future, I am wondering about how I might avoid the tax hit.

I am currently employed, and have an occupational pension, I also have a Davy Select non standard PRSA. I intend to contribute up to the maximums to my pension.

So I was wondering, can I somehow transfer my Life Assurance Policy to a pension without incurring a tax event. Reading the [broken link removed] I don't see any reference to this case. But someone must have tried to do something like this before.

Anyone any experience with something like this?

The sum is fairly substantial, so financing a custom pension produce might not be out of the question.
 
No. The property has to be at arms length, so your pension fund can't buy it off you.

Your pension also has to actually buy the property, so you have to sell it and pay whatever CGT is due on it.


Steven
www.bluewaterfp.ie
 
Hi SPC100
As an investment product with AXA you are taxed under Exit tax which is charged on gains and taken every 8 years or when you cash in or transfer the investment - whichever comes first. Pensions have an entirely different tax treatment. How long have you had this investment? If you are nearing 8 years the tax issue is no longer a material issue for you.
If you have a number of years to go before you reach the 8th year, then your issue is as follows;
If you pay exit tax now and the value falls before you cash it in you will have paid excess tax. If however the values go up over the next 8 years ( with a new investment manager) you should be unaffected. If you are a long term buy and hold investor, this potential tax issue should be less of a concern. I would focus more on getting the appropriate low cost investment strategy ( which I think you mentioned in another post ) now rather than having the tax tail wag the investment dog.

Regards Vincent
 
Hi Steven,

Agreed if the OP stays in the same investment wrapper. I was looking at where they pay exit tax now and move to another provider and subsequently cash the 'new' investment in. My understanding is that the 'old' cant be offset against the 'new' investment in terms of tax and in that scenario the OP might ending paying more exit tax.

Vincent
 
Thanks Steven and North Star.

I have 3 years remaining of the 8 year term. If I encash today, I agree that over the next 8 years as a buy and hold investor, it is likely to be worth more in 8 years, than today, but it is not guaranteed. The tax hit today is a decent sum of money, and will mean that I will not have that decent sum earning investment returns for the next three years. But, this is irrelevant, as I am effectively being forced to encash.

I was wondering if any other options existed to optimise the tax situation/prevent the tax event.

Thanks for the details on the property pension Steven. I had heard of arm's lenght, but I thought it was the rental that had to be arms length, and not the acquiring of the property.

So the only way to put something into your pension is with cold hard cash, no transferring in assets that you already hold.
 
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