In the days of the Celtic Tiger, many company directors built up quite substantial pension funds and, in turn, took very generous salaries from their thriving companies. The treatment of these funds on death was straightforward; revenue allowed 4 times the deceased director’s salary to be paid into the estate tax free and any remaining monies in the pension fund were paid to beneficiaries as an annuity (annual income for life).
Today, however, there are issues that need to be addressed by directors who built substantial pension funds and still hold these funds. In substantial numbers, these directors are now taking much lower salaries from their companies as survival mode prevails. The issue is that, if a director dies, the 4 times salary (calculated at time of death) is now a substantially lower figure. What this means is that a much lower sum is paid out to the estate, with the bulk of the pension fund now having to purchase an annuity which often is very bad value for money. It locks up liquid cash which cannot be accessed when most needed. This can and needs to be addressed by all who may be in this situation and it’s very important that you ensure you get the correct advice and clearly establish the issues for you as an individual… too late after the event.
If you feel you may fit into the category outlined above, contact us here at Metis Ireland for a confidential consultation looking at your particular circumstances.
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