What happened
The idea of such flexibility is that it allows business owners, who may not be able to afford pension contributions in certain years, to maximise their tax relief. Such schemes also allowed a broader range of investments than a standard PRSA, for example. On June 24th, just one week ahead of the IORPII deadline, the Pensions Authority published a statement on its website on the issue of compliance by one-member schemes. The authority warned that trustees of such schemes would face prosecution from July 1st unless they complied with the new rules.
Rachel McGovern, a director with Brokers Ireland, says the move follows some work proposed by the industry, which led to Revenue approving a number of master trust structures for one-member schemes. Zurich Life has also brought a new solution to the market, which facilitates this type of business in the Zurich Master Trust.
However, as Jonathan Sheahan, managing director with Compass Private Wealth, says: “This isn’t a big deal for 99 per cent of individuals,” adding that the new master trusts cannot have any early exit penalties, “which will be welcomed by individuals as it gives freedom to move if needed”. A spokeswoman for Standard Life says the changes ‘will make the PRSA a comparable alternative to an executive pension plan by providing the same benefits, features and investment choice’