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Why do you need a Buy Out Bond?

It is not unusual to change jobs throughout your career. Why would you leave your old pension under the control of your previous employer? Over the years you may also lose track of what pension you have with what company especially if you change jobs numerous times.

A Buy Out Bond is a single premium defined contribution Pension Plan effected by the trustees of an occupational pension scheme on behalf of a scheme member who is leaving service or on the wind up of a scheme. In certain circumstances, the member can opt to have a ‘transfer value’ representing the value of a preserves retirement benefit, paid into a Buy Out Bond. This means you will have control rather that depending on your previous employer/trustees to act on your behalf. You can choose a provider that you trust to look after all your pension needs. This enables you to have more choice and flexibility to make decisions about your pension and choose from a wide range of funds from equities and deposits to execution-only stockbroking.

Transfers in

Only the following can be transferred into a Buy Out Bond

• Transfer value from an occupational pension scheme

• Transfer value from a UIK pension arrangement

• Transfer from another Buy Out Bond held by the same individual

 Transfers out

A transfer can be made from a Buy Out Bond to:

• An occupational pension scheme of which individual is a member

• UK pension arrangement of which individual is a member

• To another Buy Out Bond held by the same individual

How can benefits be taken

On retirement benefits can be taken as follows:

• 25% Tax free

Balance to buy

• Annuity

• ARF

• taxable cash

(Subject to a minimum requirement €63,500 AMRF/ Annuity)

You can access your Buy Out Bond funds from age 50 or earlier on ill health retirement.

 An AVC is a short name for and Additional Voluntary Contribution, which is a means by which a member of an occupational pension scheme can increase of top up their employer’s occupational pension scheme benefits, within Revenue limits, at their own expense.

Who can take out an AVC?

An individual can pay an AVC if:

• They are an employee

• They are a member of their employer’s occupational pension scheme, and

• Their employer provides a facility for members of the scheme to pay AVC’s

Structure

AVCs will be either

• Defined Contribution: benefits provided by the AVC are those which can be secured by the accumulated vale of AVCs paid by the member.

• Defined Benefit: defined level of retirement benefit is promised for a particular level of AVC.

Different ways to pay AVCs

AVC’s may be structured in one of three ways:

• As an AVC to the employer’s occupational pension scheme itself. Or

• As an AVC to a separate associated AVC occupational pension scheme established by the employer: this will usually be a group AVC scheme

• As an AVC to a stand alone PRSA

Taking AVC benefits

AVC benefits must be taken at the same time as the individual takes benefits from the employer’s main occupational pension scheme. {KomentoDisable}

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ARF/AMRF

 No I haven't let the cat walk across the keyboard.

These letters could have a major impact on your retirement.

ARF stands for Approved Retirement Fund. This is a fund, in which you can invest all, or part, of your pension fund as a lump sum.

Can I make withdrawals from my ARF fund?

Yes , you can do so at any time. You must make a minimum of 5% of the ARF fund value annually. Your fund avails of tax free growth. However, payments from the fund are subject to PAYE tax.

What happens to the fund when I die?

The value of the ARF on your death, can be transferred to your spouse. Withdrawals by your spouse, would of course attract similar PAYE considerations.

Is there a minimum value to avail of the ARF?

Yes. You must have at retirement stage, a guaranteed income for life of €12,700 per year. Otherwise, you should consider an AMRF.

What is an AMRF?

It stands for an Approved Minimum Retirement Fund. In order to make similar provisions as an ARF you must invest €63,500 in an Approved Minimum Retirement Fund. There is an age restriction of 75 before you can access your funds.

What should I do next?

Planning for your retirement is important. There are lots of decisions to make, which can have a major impact on the value of your retirement fund.

 It costs nothing to talk to our experienced experts. It can save you thousands.

 Remember, the sooner you start your pension, the more valuable it becomes.

If you have already started your pension, then you should carry out regular reviews, to make sure that it is performing properly, and according to plan.

Book your review today. {KomentoDisable}

 What is an annuity?

An annuity is a guaranteed lump sum for the rest of your life.

Many people use the proceeds of their pension to purchase an annuity.

This then provides their pension income.

If you are a member of a large defined benefit scheme, it is quite possible that an annuity will not be bought

You do not have to take the annuity offered by your existing pension company.

Annuity rates vary between companies so you need to check which one will give you the best deal.

This can be a valuable opportunity to increase the value of your retirement income.

When should I plan for an annuity?

You should plan for your retirement well in advance. Don't wait until you are about to retire. Look at your pension value and work out how much it would provide currently. Will this be enough to provide an income when you retire, taking into account the effects of inflation ? You may need to decide whether or not to set aside more funds for your retirement income. Try our pension gap calculator.

 How do I choose the best annuity?

 There is a wide choice of annuities available on the Irish market.

You should talk to one of our qualified advisers for advice on choosing the right one for you.

 What should I do next?

 It is important to get your pension provisions right.

 It is a good idea to get expert help,so talk to us today.

 Use the call me back button. {KomentoDisable} or telephone 1890 666 666

Or avail of the get a quote button to start the consultation process, and start making use of the tax saving opportunities today.

Unit Linked Savings

A Unit linked savings plan is a life assurance policy to which the policyholder pays a regular premium usually monthly, which notionally buys units in one or more unit funds operated by the life company. The policyholder may encash these units at some stage in the future, to provide a capital sum to meet some financial need.

Purchasing units

As each regular premium is paid into the plan, it purchases units of the life company’s unit fund at the Offer price. As the number of units attaching to he plan increases so does the encashment vale of the pan therefore building up a capital sum.

Savings term

Most unit linked plans do not have a fixed savings term. Most plans are open ended- can encash the plan at any time. However, Life assurance savings plans are not suitable for short term savings and the normal recommended minimum savings term is usually 10 years. This is because of the charges deducted from the plan at the outset and the fact that the premiums are usually invested, through the unit fund, in stocks and shares which can fluctuate in value.

Encashment Value

The encashment value at any time is usually calculated as:

No of Units * Bid price

Life Cover

 A unit linked savings plan issued by a life assurance company is a life assurance policy; it must provide some death benefit. I.e.

• A specified level of cover or

• The encashment value of the plan at the date of death {KomentoDisable}

Financial Review

A Financial Review is a full check up of all your financial outgoings the purpose of which is to ensure that you are spending no more than necessary and getting the best value for your money. Your life protection, serious illness, income protection, retirement provision, savings both short and long term will be accessed and you will be provided with a full report of the findings.

What documents do I need in order to avail of a Financial Review?

Any existing financial documents such as bank statements, mortgage statements, life protection policies, car and home insurance policy documents together with any insurance documents.

How much will it cost me?

Not having a Financial Review could cost you thousands. Most reviews lead to substantial savings. Your first appointment is FREE and a detailed account will be provided to you at this meeting.

How long will it take?

Your first meeting will take approximately 1 hour and your second should take approximately 45 minutes. Don’t delay –call 1890 666 666 and make your FREE appointment today.{KomentoDisable}

Unit Linked Bonds

A unit linked bond is a single premium whole of life policy, where a once off premium is invested to purchase units of a unit fund or funds operated by the life assurance company.

Tracker Bonds

Life Assurance companies offer structured investment bonds (tracker bonds), that aim to allow investors participate in equity market returns with the benefit of a high level of capital guarantee. They are fixed term bonds, usually between 3 to 6 years.

Structure

The investment made by an investor in a deposit Tracker Bonds is split into three components:

• Most of the depositPROTECTION

• Personal Protection

• 1/ Income Protection

• Ever wondered how you will pay your bills/ mortgages, look after your family should you be unable to work and have no income? mypremium.ie can erase this worry for you by protecting your income with an Income Protection policy. A huge benefit of taking out an Income Protection policy is that you can avail of tax relief at your marginal rate of tax thus making your premium more cost effective. (Your premium will be reduced by either 20% or 41%)

• Are you self-employed? The government will only pay State Illness benefit of €188 per week for employed people. Therefore if you are self-employed you will have to be entirely self-sufficient and it is extremely important that you protect your income with an income protection plan.

• Income Protection pays out a regular income (up to 75% of gross income) after a deferred period should you be unable to work due to sickness, accident or disability up to retirement age.

• Here at mypremium.ie we can choose from a huge range of Product Providers to tailor the best plan to meet your specific needs.

• Flexible Options:

• Range of Deferred Periods: 4, 8, 13, 26 & 52

• Guaranteed Premiums- premium will remain fixed for the whole term of the plan

• Access to Best Doctors- a second medical opinion

• Waiver of premium- do not pay your premium during a claim

• Guaranteed Insurability: Increase your cover by up to 20% of the original amount every three years

• Own Occupation- benefit paid if insured is unable to carry out their normal occupation

• Change of Occupation- life insured is not penalised for changing occupation

• Indexation- premium & cover amount will increase each year

• Protect your family today, don’t delay. Call one of our Financial Advisors on 1890 666 666 for an in-depth consultation.

Investment Term

Being ‘’whole of life’’ policies, unit linked bonds do not have any fixed investment term. However due to impact of charges and the fluctuating value of unit fund prices, it is normally recommended to leave the investment for at least 3 years and preferably at least 5 years.

Charges

A bond may have some or all of the following charges:

• Initial monetary set up charge

• Allocation rate

• Bid/offer spread

• Fund Management charge

• Fund Dealing costs

• Early encashment charge

• Administration unit cancellation

• Trail commission deduction

• Bonus units

Death Benefit

Unit linked bonds frequently provide a death benefit slightly higher than the encashment value of the bond. E.g. 101% of value of units on death.

Unit Fund Choice

There may be a wide choice of different funds managed by a range of external or outside fund managers, in addition to company’s own managers. There may also be specialist unit funds i.e. geographical. There may also be funds with difference investment management styles.

Partial encashment

Most unit linked bonds offer the investor the option to take a partial encashment. Any early encashment charges would only then be applied to the unit holding actually enchased.

Fund Switching

Unit linked bonds offer investors the opportunity to switch units from one unit to another, usually on a Bid to Bid price basis.

With Profit Bonds

A with profit whole of life policy is a form of traditional with profit which provides a guaranteed sum assured payable on death whenever that occurs, in return for a fixed premium. The premium may be payable throughout life or may cease at a specified age i.e. 65.

The life company actuary works out the profits of the life company’s with profit fund each year and then decides on the bonus to be added to it with profit policies for that year. There may also be a terminal bonus added on maturity of the policy.

Encashment Value {KomentoDisable}

A with profit whole of life policy acquires a surrender/ encashment value i.e. a cash sum which the life company pays if the policyholder decides to stop paying premiums and terminates the plan. The encashment value gradually builds up over the years.