The Finance Bill contains important changes to pensions. These changes have added further complexity when the governments stated aim is to simplify pensions. Below is a summary of the changes that will take effect when the Finance Bill is enacted:
An employer limit of 100% of the director’s/employee’s remuneration in the current year.
Employer PRSA contributions over this limit will be subject to BIK for the employee and may not be included by the employer as an expense.
For most clients the maximum funding rates that have always been available on company pensions provide sufficient opportunity to help clients meet their retirement goals.
While employer PRSA contributions have been reduced, they do still allow for higher contribution rates than were available pre-Finance Act 2022. PRSA clients currently paying in excess of the new Finance Act 2024 limits will need your support and advice to review their pension funding needs.
There was no change to what had already been announced by the Minister in advance of the Budget. But there has been some clarity about how the changes will interact with pensions that have already been accessed.
These changes mean that if someone has already used up their Standard Fund Threshold of €2 million, they will not benefit from the increases. However, an individual who has used part of their threshold (say, €1million) will benefit from a corresponding uplift to their unused threshold (of €100,000, or 50% per increase.)
- “My Future Fund”
The Finance Bill also includes more information on the Auto-enrolment pension scheme, now called “My Future Fund”. This has given some clarity to how the scheme will work. It has also give the start date of the scheme as the 30th of September 2025. A summary of the new information is below:
It is important for employers to budget as this is going to be an additional cost that can’t be avoided. It is even more important for employees to know that the contribution rates are based off Gross Pay, but it will be taken from Net Pay without any tax relief. This will reduce their cash flow.
Should you wish to discuss any aspect of pensions, please contact our team.
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