Staff at IPF raised money for the Peter McVerry Trust on Friday by holding Funky Shirt Friday in our offices!
Many thanks to everyone who contributed!
More than 23,000 pensioners who had their pensions reduced after taking a career break to care for loved ones have had their retirement payments increased, the Irish Examiner can reveal.
Social Protection Minister Regina Doherty has confirmed that since the controversy erupted in the wake of the Budget 2018 a major review has been undertaken with over 90,000 cases examined.
Ms Doherty has said that her department has examined the social insurance records of approximately 90,000 pensioners, born on or after 1 September 1946, who had a reduced rate State pension contributory entitlement based on post Budget 2012 rate-bands.
Ms Doherty has confirmed that, as of last week, 47,755 reviews – which is over half of all pensioners identified for review – have been completed.
Of these, 23,523 pensioners received an increase in their rate of weekly rate of pension and 24,232 are remaining on their existing rate of payment, she said.
Based on a sample analysis of some of the increases awarded, the best estimate at this stage is that 13% of those who received an increase received a weekly increase of €30 or more; 36% received a weekly increase of between €20 and €30; 7% received an increase of between €10 and €20; with the highest proportion, 44%, receiving an increase of up to €10 per week.
“Importantly, most of those who received less than €10 following their review achieved maximum personal contributory pension rate, which cannot be further improved upon,” Ms Doherty said.
The Irish Examiner has learnt that reviews commenced from 13 February 2019, the day after she signed the necessary Regulations which, together with provisions in the Social Welfare, Pensions and Civil Registrations Act 2018, allows the increased payments to be made.
Regardless of when a review is conducted, where an increase in payment is due, the person’s rate of payment is adjusted without delay and arrears paid, backdated to 30 March 2018 or the person’s 66th birthday if later, the minister confirmed.
Where a person’s rate does not increase following review, the person will continue to receive their existing rate of payment.
The Government will have to find €55m next year to cover the cost of fixing the 2012 pensions anomaly relating to carers who took time out of their careers.
On foot of the controversy, the Government decided to allow State pension (contributory) recipients affected by the 2012 changes in rate bands to have their pensions entitlement calculated on a total contributions approach basis.
The changes included a provision for up to 20 years of a new “HomeCaring credit”. This would benefit people whose work history includes an extended period of time outside the paid workforce, raising families, or in a full-time caring role.
According to the report, reviews will commence in the final quarter of this year, with the first payments being made in the first quarter of 2019. It is estimated the full-year cost will be in the region of €35m.
“Backdating to March 2018 will cost an estimated €20m, resulting in a 2019 cost estimated at some €55m. This is not currently included in the [department’s] 2019 ceiling,” the report said.
by Daniel McConnell
Many people seem to distrust both life insurance and the people who sell it. Why should this be? I’m sure it is partly because no one likes to think about anything bad happening to them, and partly because – in order to draw attention to a very real need – life insurance salespeople are forced to bring up uncomfortable subjects with their prospective clients.
However, although it is not something you may rush to tackle, making certain that you have adequate life – and health – insurance will bring you genuine peace of mind.
First-class medical protection, critical or serious illness cover and life insurance are available at a remarkably low price providing you know how to buy it but you must:
You know you should…
It isn’t pleasant to dwell on being ill, having an accident or – worst of all – dying. Nevertheless, you owe it to yourself – and those you care for – to spend a little time making sure you are protected should the worst happen. This means being:
There are, of course, plenty of facts and figures available proving just how likely it is for someone of any age to fall ill or die. Sadly, such statistics are borne out by everyone’s personal experience. The truth is we all know of instances where families have had to face poor medical care and/or financial hardship as the result of a tragedy. We all know, too, that spending the small sum required to purchase appropriate cover makes sound sense.
Spend time, not money
The secret is to identify exactly what cover you really need and not to get sold an inappropriate or overpriced policy. It is also important to review your needs on a regular basis. What you require today, and what you’ll require in even two or three years’ time could alter dramatically.
The best way to start is by considering what risks you face and deciding what action you should take. Here are three questions that everyone should ask themselves, regardless of their age, gender, health or financial circumstances.
Question 1: What would your financial position be if you were unable to work – due to an accident or illness – for more than a short period of time?
Obviously, your employer and the state will both be obliged to help you out. However, if you have a mortgage, other debts and/or a family to support your legal entitlements are unlikely to meet anything like your normal monthly outgoings. If you do have a family then your spouse will have to balance work, caring for you and – possibly – caring for children. Is this feasible or – more to the point – desirable? How long will your savings last you under these circumstances? Do you have other assets you could sell?
Unless you have substantial savings and/or low outgoings then income protection cover and/or critical/serious illness insurance could both make sound sense.
Question 2: Do you have anyone dependent on you for either financial support or care? Are you dependent on someone else financially? Do you have children – or other family members – who would have to be cared for if you were to die?
If you are single and don’t have any dependents then the reason to take out life insurance is in order to settle any debts and/or leave a bequest. If, on the other hand, there is someone depending on you – either for money or for care – then life cover has to be a priority.
If you are supporting anyone (or if your financial contribution is necessary to the running of your household) then you need to take out cover so that you don’t leave those you love facing a financial crisis.
If you are caring for anyone – children, perhaps, or an ageing relative – then you should take out cover so that there is plenty of money for someone else to take over this role.
Question 3: Does it matter to you how quickly you receive non-urgent medical treatment? If you need medical care would you rather choose who looks after you, where you are treated and in what circumstances? How important is a private room in hospital to you?
We are fortunate enough to enjoy free basic health care in Ireland. However, if you are self-employed or if you have responsibilities which mean that it is important for you to be able to choose the time and place of any medical treatment, then you should consider private medical insurance.
Less than 20% of young people were contributing to a pension, compared to more than 70% of those aged 45-54
Less than half of all employees in Ireland were saving towards a pension last year, according to the Central Statistics Office.
Its survey of pension coverage in the third quarter of 2018 found that 47.1% of all people in employment were contributing towards a private pension.
That is up 0.4 percentage points on the same period of 2015.
When pension coverage from previous employments, as well as deferred pensions and pensions in draw-down mode, are included the ratio of those covered rose to 56.3%.
The CSO found that just 16.3% of people aged 20-24 were contributing to a pension, compared to almost 71% of workers aged 45-54.
Meanwhile the data shows that more than half of all self-employed people had pension coverage.
The Irish Congress of Trade Unions said the figures highlighted the need for pension auto-enrolment as part of a wider reform of the system in Ireland.
“Tax relief has failed as a policy instrument for encouraging low and middle-income earners to save enough towards a financially secure retirement, and there is no legal obligation on an employer to provide or contribute to a pension scheme for employees,” said ICTU’s social policy officer Dr Laura Bambrick.
“As the State pension is paid at a flat-rate, rather than earnings-related, workers without retirement savings are exposed to a significant drop in their living standards in old age.”
LACK OF PENSION PROVISIONS AMONGST YOUNG WOMEN SIGNALS FUTURE OF FINANCIAL DISEMPOWERMENT
25 February 2019: According to a new survey commissioned by leading Pensions provider, Aviva, planning for retirement is way down the priority list for women in Ireland, with only (6%) of women surveyed perceiving it as being a high priority. The Behaviour & Attitudes Survey* of over 1,000 adults nationwide reveals that over 6 in 10 (63%) of women surveyed said they do not have a private pension with over half (55%) of these women admitting they had never considered putting one in place. Almost half (47%) of men cited having a pension, compared with only (37%) of women, which represents a pension pay gap of (10%) and could point to a future of financial disempowerment amongst future female retirees.
When asked about the prospect of auto-enrolment, over 2 in 5 (43%) men were aware of the Government’s plans, when compared to 1 in 3 (33%) of women. A larger cohort of men (64%) were also found to be in favour of auto-enrolment in comparison with (58%) of women surveyed. When asked about security of their future retirement income, almost 2 in 3 (59%) men indicated a higher level of confidence when compared to only 2 in 5 (40%) women, suggesting greater levels of concern amongst females when it comes to pension provisions.
Ann O’Keeffe, Head of Individual Life and Pensions, Aviva, said of the findings: “Having conducted this same survey for the last 4 years we have found that, worryingly, pension coverage for women has remained largely stagnant at (37%) since 2014. While the participation rates for both genders are far too low – the case for women is particularly concerning. Saving for retirement doesn’t appear to be high on people’s agenda.”
While insights demonstrate a disparity across genders when it comes to retirement provision, unsurprisingly, age too plays a significant role. The research shows young workers aged 25-34 as being the age group least likely to have a pension (30%) when compared with (54%) of 35-44-year olds and (43%) of 45-55-year olds, which suggests a pension is not a focus for most people in their 20s and 30s, limiting their potential contribution period.
On this, Ms. O’Keeffe commented:
Of those under 35 without a pension, almost 2 in 3 (58%) say they simply have never thought about it. The survey paints a clear picture of a highly optimistic generation in their financial well-being when they can no longer earn an income While it is understandable that retirement provisions might be the last thing on people’s minds, particularly for younger people, in actual fact it’s one of the most important financial decisions a person can make during their working life.”
“Thankfully, we are all living longer, more active lives and our good fortune in this respect should not become a financial burden. That is why we need to ensure that women – as well as men – across all age groups understand the benefits of financial planning as early as possible in their careers.”
Aviva customers and consumers alike are invited to visit www.mindthepensiongap.ie to avail of its free online pension calculator and for more information on a range of bespoke retirement savings plans.
Here are a few reasons as to why home insurance is a must-have thing and how it can help one to avoid a huge financial setback in the event of any mishap.
When you buy home insurance online or offline, make sure you opt for the policy offering the best cover.
A home is not merely a structure made of cement and bricks, it is a space filled with emotions. People earn for their lifetime and give everything to build a place where they could live comfortably with their family.
You gave your all to have a home of your own, but do you have any backup plan to protect the same?
There are few things which we as a human do not have control over, and to protect the ‘humble abode’ that you have instituted with the years of constant dedication and hard work, home insurance should be your top priority.
However, the irony is, people see it as an unwanted expense, but in fact, it is not. Let us check out some legitimate reasons as to why house or home insurance is a must-have thing and how it can help you avoid a huge financial setback in the event of any mishap.
As mentioned earlier, there are few things which are beyond our control, and natural disasters aka “Acts of God” are one of them. It can strike anytime, and anywhere. Remember the recent floods of Kerala, Uttarakhand and Mumbai that affected millions of lives with deaths, injuries, and destroyed homes. People witnessed houses and assets getting destroyed in front of their eyes and had to use their hard-earned savings to rebuild homes. It was a traumatic and emotional experience for them.
Therefore, to protect yourself and your family against “Acts of God” such as landslides, floods, earthquakes, cyclones, etc., it is important for you to buy a home insurance plan.
No doubt we live in a technology dominating society where we have the latest and fanciest of safety measures, such as CCTV security and gated communities, but we cannot rely on them completely for our security, can we?
Man-made disasters such as riots, strikes, robberies, terrorism, thefts, etc., are a real risk and still prevalent. And this makes for a strong reason for you to have a proper home insurance plan. However, some insurers may not cover for the losses due to all these risks, but you can ask them for extra protection in the form of riders.
Home insurance not just covers your house, but also the contents within. Things like electronics, furniture, jewelry, light fixtures, antique items, valuable home appliances, etc., are also covered under a home insurance policy. However, the scope of coverage might vary as per your preferences. In case of any damage or theft, you will get compensation for the same or even get them replaced with the new ones. So when choosing a home insurance plan, you can actually opt for the things that you want to get cover for along with your home insurance.
For many, home insurance may seem like an unnecessary expense but a few know that it comes at a fairly low premium rates, which may be cost lesser than a rupee per day. And in return, home insurance buyers get significant benefits. Further, you get the flexibility to increase or decrease the premium amount as per your affordability by simply adding or removing the items to be insured under the policy.
What if you incidentally damage someone else’s property owing to the spread of fire? You will be in a legal hassle. But, home insurance can save you from such hassles by covering the cost for the damage caused to another property due to any incident. Not only this, it also covers the cost for the medical expenses of the visitor or guest injured in your property during that event.
If in case you experience a loss due to fire perils, and it makes your home inhabitable, be it owing to natural disaster or manmade circumstance, you may have to find a temporary accommodation until your home gets reconstructed. In that case, your insurer pays for your rent. So, being a responsible individual, it is always wise to be prepared for the worst, and home insurance ensures financial support in such situations.
You cannot deny the fact that for most people, home insurance actually sounds like a certain expense for an uncertain reason. However, the peace of mind offered by home insurance is more than anything that money can actually buy for you.
So, it does not matter whether you own a villa or an apartment, once you buy home insurance for it, you get the luxury of peace of mind because you know that you are prepared for the worse.
Buying home insurance is indeed a proactive step you take to protect your home from unforeseen dangers. It signifies what extent you can go to protect your home. Moreover, home insurance is the right policy to provide protection from uncertainties not only to homeowners but to tenants as well. However, when you buy home insurance online or offline, make sure you opt for the policy offering the best cover.
(By Subrata Mondal, Executive Vice President at IFFCO Tokio General Insurance Company )
Many thanks to all who attended our recent Retirement Planning Seminar in the Westbury Hotel and to our panel of speakers who provided useful information on the night.
To date, IPF have held 20 Seminars around the country for Public Sector employees. We have had over 2,000 attendees in total to these seminars.
These events prove to massively popular and are always oversubscribed.
Our next Seminar will be in The Kingsley Hotel in Cork City on the 5th October 2018. Those interested in attending should book their places as soon as possible through email@example.com.
Here is the usual agenda for the seminar:
“Retirement Planning and how your benefits work” Claire Hanrahan, Financial Advisor
“Keeping Safe in Retirement” Sgt. Dean Kerins, Crime Prevention Officer, An Garda Siochana
“General medical guidelines for over 60’s” Dr. Rita Galimberti, Consultant, Femplus Womens Health Clinic
“Taxation; Essential information for you pre and post retirement” Ray McGovern, Chartered Accountant, McGovern & Associates
“Investing in a Challenging World” Stephen Dixon, New Ireland Assurance
“Active Retirement and managing your newfound free time” Pat Murphy, Planning Consultant, Retirement & Life Planning
It’s something that frustrates, enrages and outrages in equal measure: inheritance taxes on the family home. For many people, having paid down a mortgage with after-tax income throughout their lives, leaving a legacy of a substantial tax bill for their children feels akin to double taxation.
And yet, despite the outrage, most of us are shockingly ignorant about just how Ireland’s inheritance tax regime works. A recent survey from Irish Life, for example, revealed that while a quarter of over 65-year-olds expect to leave estates of more than €500,000, half of adults think their family home is exempt from inheritance tax.
Unfortunately, for many families leaving homes valued at Dublin prices, having to write a large cheque to the Revenue Commissioners in the aftermath of a death can come as an unwelcome, and sometimes unaffordable, surprise.
So what do you need to know about death taxes on the family home in Ireland?
It is possible to transfer property to someone else – without incurring a tax bill – in a number of ways. Firstly, inheritance tax doesn’t apply if the value of the property falls within the tax-free thresholds.
“For the vast majority of people that would be the case, particularly outside Dublin, where properties wouldn’t hit the exempt thresholds,” says Darragh McCarthy, head of private client services at EY.*
This means, for example, that a property worth €400,000, shared by two children, won’t incur a tax bill, as the transfer to each is within the parent-to-child thresholds (€310,000).
Similarly, if five nieces and nephews inherit a house worth €162,500, no liability will apply, as it’s again within the thresholds (€32,500), while if you inherit a share in a property from someone who isn’t related to you, and it isn’t worth more than €16,250, again there will be no bill.
Should you go over these thresholds, however, tax at a rate of 33 per cent will arise – even on the family home. A property worth €600,000 inherited by one child will incur a tax bill of €95,700.
“Although many people intend to leave significant amounts to their children and grandchildren when they die, most of them are unaware that those family members could be liable for a very substantial tax bill on those inheritances,” says Kate Connor, protection manager with Irish Life.
For example, a property worth €600,000 inherited by one child will incur a tax bill of €95,700 (33 per cent of €600,000-€310,000), while a property worth €100,000 left by someone with whom you have no recognisable relationship with will incur a bill of €27,637 (33 per cent of €100,000-€16,250).
If you’re married or in a civil partnership, no tax is liable on asset transfers, which means that a family home or investment property can be transferred with no tax liabilities.
Remember, however, that it only refers to legally recognised partnerships; common law partnerships are not recognised by the Revenue Commissioners, which means that even if a couple have been together for 60 years, should one of them die, there will probably be a tax bill to settle. Yes, their life insurance may in fact pay off the mortgage on the property, but the surviving spouse will still incur a tax bill on the transfer of this property to their estate.
Another way of passing on a property tax-free is to avail of the so-called dwelling house exemption – but its use has been restricted.
Used by thousands of people to pass on properties to their children, free of tax, the dwelling home relief was once a very popular tax exemption. However, its use was tightened significantly from December 25th, 2016.
“In practice it doesn’t have wide application,” says McCarthy. “I wouldn’t expect to see it much into the future.”
But it might still be of use to some.
The key criteria that now allow someone to inherit a property tax-free is that the property must have been the “only or main home” of the person who died. In addition, and this is where it gets tricky, is that the person inheriting must now have also lived in this property as their main residence for the three years prior to the transfer. Other requirements mean that to inherit tax-free, they cannot have an interest in any other property, and they must also stay in the house for six years after the transfer.
But there are some ways of getting around some of these points.
First of all, the three-year rule as well as staying in the property for six years subsequently does not apply where people are aged over 65.
Moreover, people can avoid this requirement in a number of ways. Firstly, if they sell the property they’ve inherited and invest all of the proceeds in another property, the relief stands. It also stands if the successor has to move either somewhere else in Ireland, or abroad, for work reasons.
Another quirk is that even if the owner of the property goes into a nursing home in the final years of their life, the person inheriting can still avail of the relief if they were living in the house.
For many families, a discussion about what happens in the event of the parents’ death never really happens until after the fact.
Others, however, are more proactive, and may wish to downsize – particularly at a time of a housing crisis when children may be eyeing up enviously their parents’ home.
But according to McCarthy, while each case will be different, transferring the family home during your lifetime can be more expensive than waiting until your death. This is because Irish stamp duty applies to lifetime gifts to property, which would not apply to inheritances on death. This means, for example, that the transfer of a house worth €500,000 would incur stamp duty of €5,000, while a property worth €2 million would incur duty of €40,000 – enough perhaps to make you think twice. And the rate of duty on investment properties is 6 per cent.
And of course, if the parents pay the stamp duty on behalf of a child, this could give rise to a capital acquisitions tax (CAT) liability.
One way to deal with the transfer of investment properties would be to house them in a company structure, as the company cash could then potentially be used to settle CAT charges. As a related point, McCarthy advises families at the early stage of property investment to consider co-investing, as in the event of the deaths of the parents, the children’s CAT liabilities will be restricted to the deceased’s share rather than the entire portfolio.
There can definitely be a sting in the tail for individuals who have foreign property, as they can often completely ignore foreign estate issues
And be careful also of other implications when considering a transfer during your lifetime. While a parent can sell a home to a child at a discounted price, the difference between the sale price and the market value will be considered to be a “gift” by the Revenue Commissioners, and will thus attract CAT if the child has already exhausted their tax-free threshold.
A nifty way to approach this, says McCarthy, is to make use of the €3,000 annual small gifts exemption (unchanged since 2003, it should be noted, and thus ripe for an increase).
If the property exchange was funded via a “loan” from the parent, for example, the parents could then, potentially, pay off the loan to the order of €6,000 a year without a CAT bill arising – of course, depending on the size of the shortfall, this could take some time to pay off in this manner.
Another consideration is if capital gains tax (CGT) and CAT both arise, you can use the CGT you have paid as a credit against the CAT. In the context of the family home, this is unlikely to apply, as it won’t be subject to CGT, but may be appropriate for investment properties.
If so, McCarthy warns that the “sequence” of transfer/sale of assets is very important to maximise tax efficiency.
For example, in such cases he suggests that it can be more efficient to transfer the family home in the first instance and use up the thresholds, and then subsequent gifts that would give rise to CGT would be made after these thresholds are exhausted.
Finally, we’ve spoken so far of Irish-based properties – but property abroad can cause further challenges. Not something people think much about, perhaps, when buying a place in the sun.
“There can definitely be a sting in the tail for individuals who have foreign property, as they can often completely ignore foreign estate issues,” says McCarthy.
Given people’s general ignorance of potential inheritance tax liabilities, it’s helpful to learn that the Revenue Commissioners are willing to receive CAT bills in instalments. It’s less helpful, however, to learn that they’ll charge you an arm and a leg – 8 per cent interest – on such an agreement.
“This is something we’d like to see reduced,” says McCarthy, although he adds that “at least it prevents a forced-sale scenario”.
You could also consider starting to save for any potential CAT bills now, as the Revenue still allows two tax-efficient savings schemes to enable you to do this.
Section 72 policies, for example, cover the cost of settling an inheritance tax bill in the event of your death and, crucially, don’t incur a tax liability themselves. They allow you to save towards a life assurance policy, with the proceeds going to pay off an expected inheritance tax bill. The key advantage is that the proceeds of the policy is not subject to CAT. However, there are some downsides – they’re expensive (expect to pay about €218 a month for €100,000 of cover); they need careful planning to ensure they match the tax owed; they have no cash-in value; and they need to be taken out early to be worthwhile.
You could also consider a section 73 savings plan. Again Revenue-approved, this allows you to gift the proceeds of this plan to your estate to meet any tax bills – and again, this gift is not liable to inheritance tax. Moreover, you can choose to keep the funds yourself if you so wish. However, they again need careful thought and can be expensive.
Between spouses All tax free
Group A (parent to child) €310,000
Group B (relatives such as nieces and nephews) €32,500
Group C (stranger) €16,250
Fiona Reddan, irishtimes.ie