Page 26 - IMO Consultant Guide

The Consultant Guide

Enhancing Future Pension Benefits-It is possible to enhance future pension benefits for the Single
Pension and the Superannuation schemes in 2 ways.
1-Notional Service Purchase-Where a staff member will not have potential service of 40 years at
their retirement age of 60/65 years of age (65 years of age only in the case of a new entrant) i.e., full
service, the facility exists within the HSE Pension Scheme Rules for employees to purchase notional
years of service/additional pensionable service at full actuarial cost. Please speak to your local
pension office.

2-Additional Voluntary Contributions - An AVC is an additional investment option made available to
employees to enable them to make additional savings (outside of the occupational Pension Scheme)
for retirement while receiving Tax and PRSI relief on these savings. You can make Additional
Voluntary Contributions if the benefits that you will receive at retirement from your main scheme
and any benefits retained from any employment(s) are projected to be lower than the maximum
allowed by Revenue. Please seek advice before making AVC payments to ensure you will not breach
the Revenue Standard Fund Threshold (SFT). Please speak to IMO FS if you want advice on AVCs.

Professional Added Years (PAYs)

HSE consultants may have an entitlement to additional credited service for retirement benefits. This
is an award only granted by the employer on reaching retirement age. The number of years that
may be awarded will depend on the superannuation scheme the employee is a member of.

The granting of Professional Added Years may bring total reckonable service to the maximum of 40
years (max allowable). If for example, many HSE consultants will be entitled to sufficient PAYs to
bring their service up to 40 years (the maximum allowable) on retirement from 60 onwards. If the
PAYs bring you over the SFT, then this will lead to tax being due on the amount the limit is exceeded.
However, there is an option to review upwards any existing SFT or PFT when PAYs are applied at
retirement for medical consultants. If dealt with correctly this will allow you to receive a higher PFT
and reduce or negate any potential tax liability.
Revenue Pension Limits-Standard Fund Threshold (SFT)

Individuals have a maximum lifetime limit on the amount of their retirement benefits from all
sources (except State pensions).

The limit, known as the Standard Fund Threshold (SFT),is a limit or ceiling on the total capital value
of pension benefits that an individual can draw down from tax-relieved pension arrangements.

Since 1 January 2014, the value of the SFT is €2 million. From the same date, the value of a defined
st
benefit differs depending on the age at which the pension is drawn down. A chargeable excess tax
of 40% applies to pension assets over the SFT or PFT at retirement and this portion of the assets may
be taxed again at the higher rate of income tax, USC and potentially PRSI when drawn as income (up
to 52%). This leads to a combined effective rate of up to 71% on the excess amount.
If the aggregate value of your pension arrangements exceeds €2 million, it is possible to apply to
Revenue for a Personal Fund Threshold (PFT) certificate in advance of your retirement date.

In certain circumstances there are ways to mitigate the impact of exceeding a SFT chargeable
excess please talk to IMO FS to seek advice to your specific situation.

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