Executive pensions consultations
Executive Pension are an excellent recruitment and retention tool, they can be used to provide pension benefits for key employees giving you a valuable staff retention in a tax efficient way.
An Executive Pension is taken out by employers to provide for the retirement of executives and key employees. Within this type of pension plan the rules of how company directors and key employees can be rewarded are different. Below I will outline the main benefits for company directors.
As an owner of a company there are very few ways in which you can compensate yourself for your hard work. Yes, you can take a salary which is taxable, a company car which is taxable, a bonus or dividends which are also taxable.
But what if there was a way to extract some of the company wealth, put it in your name, plan for your retirement and do this with no initial tax implications?
There is an Executive Pension Plan.
If you look at an executive pension plan as a separate business in which you move some of your company profits into. This new business or Executive Pension Plan is not subject to CGT on profit, not subject to corporation tax on profit and best of all the accumulated amount when you retire is yours not the companies. In addition, executive pension for company directors have different funding rules not aligned to the traditional age-related contribution rules, see the example below:
|Self Employed||Company Director|
|45-year-old married male||45-year-old married male|
|€50,000 Salary||€50,000 Salary|
|Retirement Age 65||Retirement Age 65|
|Max age related pension contributions 25%||Max funding pension contributions|
|Or €12,500 per year||€47,333 per year|
If both contribute the max allowed in the above example for 20 years at a net return of 4% per annum their funds would be:
The above example is just one of the ways a company director can extract wealth from the company whilst also planning for their retirement.
If you would like to find out more, call me today to arrange your complementary pension review.