Insurance Ireland – Retirement Guidelines for Over 70’s
Tue Nov 17 2020
Insurance Ireland has been working with Revenue regarding the Covid-19 situation and specifically the requirement for over 70s to cocoon/shield on the grounds that they may be medically vulnerable and should not engage in non-essential meetings. This means that these policyholders may be unlikely to be able to meet their financial adviser to obtain appropriate advice on a Personal Pension/RAC and PRSA retirement claim. Revenue understood the challenges this poses to pension providers and agreed that:
- A retirement claim can be paid at a later date when these clients are in a position to complete the necessary paperwork. There is no requirement to get advance permission from Revenue.
- The normal retirement options will apply, including the tax free lump sum option subject to normal thresholds
- To be agreed with Revenue – If a client dies prior to completing their retirement claim, the benefits can be paid out in line with pre-vesting rules (i.e. not under the vested / ARF rules)
There are two options regarding the BCE tax and either is acceptable to Revenue. Revenue asks that offices let them know which approach they will take:
- The BCE tax can be remitted to Revenue as normal after a client turns 75. Then when the claim is completed, the office can reclaim the tax from Revenue. This rebate can be done by offsetting the amount to be reclaimed as a negative against the next Schedule D bulk pension tax payment to Revenue.
- The BCE tax can be deferred at the time the client turns 75. At the end of the concession period any policies that have not been claimed will need to have the tax deducted and remitted to Revenue.
In order that the impact for clients is neutral between these two options, the tax under option (b) can be calculated based on values at the end of the concession period.
Personal Pension/RAC and PRSA retirement claims paid to clients over 75 must be notified to Revenue. This does not have to be in advance, and may be done in a bulk notification.
Revenue should be informed of:
- Client’s Name
- Value of the claim
- If PPSN is not available, the client’s address and date of birth
This concession will remain in place until 31st March 2021. Any need for further extension can be reviewed in line with ongoing medical guidance at that time.