An executive pension is a pension set up by a company for directors and owners. It is managed by Trustees of the Pension scheme. Your company pays into this pension on your behalf and you can also make your own contributions.
Your retirement options
Your executive pension allows you to take a certain amount of your pension fund as a lump sum (usually tax free). The amount of lump sum you take then determines what you can do with the remainder of your pension fund.
The three main options are:
- You can take up to one-and-a-half times your final salary as a lump sum and buy an annuity (a pension for life) with the remaining fund.
- You can take 25% of your retirement fund as a lump sum and buy an Approved Retirement Fund (ARF) to keep your remaining fund invested
- You can decide not to take any lump sum and either buy an annuity or keep all of your fund invested in an Approved Retirement Fund.
Under Option 1, the percentage of your final salary you can take as a lump sum is based on how many years you have worked for your company. The maximum of one-and-a-half times of your final salary applies if you have worked for your company for 20 years or more.
For more information on your options at retirement, read our guide to Annuities and Approved Retirement Funds.
Tax on your lump sum
1. Up to €200,000 of your lump sum is tax free (this is the total of all lump sums taken since December 2015.).
2. Amounts between €200,000 and €500,000 will be taxed at standard rate of 20% since May 2016).
Amounts over €500,000 are subject to your current tax rate and Universal Social Charge (USC).
When can I retire?
With an Executive Pension you can retire at any time between the ages of 50 and 70 but some restrictions may apply if you retire before the age of 60.
How do I take my pension benefits?
To prepare your retirement papers, we may ask you to give us details of your salary and service with your employer. We will then send you your retirement papers. These will show the options available to you as well as giving you an up-to-date valuation on your pension fund with Friends First.
Your retirement papers will need to be completed, signed and returned to us with any accompanying documents requested by us.
What accompanying documents do I need?
There are certain documents you will need to send us with your retirement papers so we can complete your retirement claim.
Your original policy or Lost Policy Declaration & Indemnity Form
We need your original policy schedule to process a claim on your pension. If you have lost this document, you should fill in the Lost Policy and Indemnity Form included in your retirement papers; this must be witnessed by a third party who is not a relative.
Proof of identification
We need your original birth certificate or passport or a certified copy of either. This is to protect you against a possible fraudulent claim on your pension.
Form of Indemnity – tax-free lump sum on retirement
There is a limit (currently €200,000) that you can take as a tax-free lump sum from one or more pension plans. On this form, you must declare any sum you have previously taken so we can deduct the correct tax from the lump sum you are taking on your retirement.
Declaration of previous retirement benefits
Also known as a Benefit Crystallisation Event Declaration. You need to fill in this form to declare all retirement benefits you may have previously taken or have transferred overseas. This ensures that you don’t exceed the maximum Revenue benefit limits.
Your PPS Number (previously called RSI Number)
You will find this on any correspondence from the Revenue or on your payslip.
Tax Credit Certificate
This is needed if you are setting up an annuity with Friends First. The Revenue will issue you with a Tax Credit Certificate that sets out in detail the amount of tax credits you receive and your standard rate cut-off point.
Marriage certificate or civil partnership registration form
This is in the case of a joint life annuity. If you don’t have the original, you can send us a certified copy.
Details of salary
- 20% Director: We need copies of 3 P60s or a letter from Revenue (your local tax office) confirming your best 3 consecutive salaries within the last 10 years of service.
- Non-20% Director: We need confirmation from the trustees of your pension scheme of the final or best salary within the last 5 years of service. You can either complete the relevant section of your Retirement Papers or send us a P60.
Talk to your Financial Broker
We strongly recommend that you talk to your Financial Broker when you are making decisions about your retirement benefits.