Trivial Pension Changes

[Baracuda]

It was to my dismay today to find out that Revenue has changed the rules regarding Trivial Pension's for PRSA's and Personal Pensions without giving any prior notice to the pensions industry.

Up until now if a person had total fund of less than 20000 after taking their TFLS from all pension sources they could claim the entire fund subject to tax. Revenue has now reduced this amount to just 10000 now which means that a person will now have no option but to buy an annuity which would only give them a pension of c. 500 per year or invest in an AMRF which will have to remain invested until the age of 75.

DC pensions are not affected by this change and a member with less than 20000 after taking TFLS can still take this lumpsum subject to their marginal tax rate

Why has this change took place? Well there is a number of possible reasons but Revenue have stated "This limit is subject to change as it is linked with the general AMRF minimum investment amount in the market place"

Very bad news indeed and does not make sence. It is now up to the life companies to increase their minimum investment amount to counteract this move by those idiots with little experiance in the Revenue Pension Large Cases department

 

[boaber]

Hi Baracuda

Thanks for the info.

How did you find out? Have been on to their website & can't see anything on this, and there doesn't seem to have been an eBrief yet

Cheers

 

[Baracuda]

From Irish Life, queried it with the Large Cases department in Revenue and they confirmed same to me over the phone but am waiting for official responce not that it makes any difference.

Also found out that pre finance act 2011 vested PRSA's must keep a minimum balance of 120000 to provide an AMRF instead of 63500, again this was never communicated. Goal posts changed again without warning. There is going to be a lot of unhappy people out there as a result of these changes!