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Top Six Trends in Pensions Right Now

We may spend up to one quarter of our lives in retirement so it is important that we have the means to fund our retirement years. The best and most tax efficient way of doing this is by taking out a pension.

A pension is an extremely tax-efficient way of saving money for your retirement, which allows you to get tax relief on your contributions now, while also allowing you to take up to 25% of the value of the fund as a tax-free lump sum upon retirement. Any growth in the fund is tax free.

If you are planning a pension, don’t delay – contact SCK Group today!

Interesting article in the Irish Times about the top 6 trends in pensions right now summarised below.

  • Buying Property with your pension pot

 

A buoyant property market has led to increased interest in property for pensions. However we shouldn’t forget the property crash and caution is advised. As with any investment plan, it is best to avoid an over-concentration in any single asset class.  Direct property investment can be an attractive option for some.

  • Multi Manager Solutions

 

This assumes that no one manager is highly skilled in investing in all areas and these strategies allocate funds to a range of fund managers, who specialise in certain disciplines. The challenge is to ensure that managers to not take on undue risk and manage within the guidelines you agree.

  • Last-Minute Funding

 

There is an increasing number of company directors maximising their contributions to their retirement fund. Private individuals approaching retirement age can put up to 40% of their salary into their pensions and claim top-rate tax relief. If the individuals are nearing retirement, they know that they won’t have to wait long to access their money.  This is a tax efficient way for Company Directors, with the required level of service, to extract money from their businesses.

  • Focus on digital communications and engagement tools

 

In the world of auto-enrolment and a move towards Defined Contribution schemes, there are new developments in digital communications and engagement tools for members. This provides a cost effective support for members.  Personalised messaging is more likely to drive action by members.

  • Choosing an ARF rather than an annuity at retirement

 

The rules for accessing Approved Retirement Funds (ARFs) have been relaxed in recent years leading to an increase in the number of retirees choosing an ARF as opposed to purchasing a lifetime income called an Annuity.   The cost of annuities has also risen considerably, meaning that retirees would need to live well into their 90s to see value from them.

  • Taking a transfer value from a DB scheme to access ARF options

 

Increasing numbers of defined-benefit scheme members are choosing the option to take a transfer value from the defined benefit scheme into an alternative pension arrangement. In some cases this is being incentivised by employers.  The member might wish to access an ARF at retirement or obtain a higher retirement lump sum by transferring.  Currently, it is not possible to access the ARF option directly from a defined-benefit scheme, however, there are increasing calls for this rule to be relaxed in the future.

Summary based on Mimi Murrays article in the Irish Times 28th Oct 2018

 

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Not sure everyone feels this way..

We are wealthier than during the boom, says Central Bank

Article in today’s irish times by Eoin Burke-Kennedy.

Summary:

  • According to Central Bank’s latest quarterly financial accounts, the net worth of Irish households hit a record €757 billion in the second quarter of this year, eclipsing the boomtime pre-crash peak of €719 billion reached in the second quarter of 2007. This represents a 76% increase since the bottom of the market in Q2 2012.
  • Household net worth is calculated by adding the total value of the housing stock and financial assets – such as cash savings, shares, pensions and possessions such as cars and antiques – and subtracting debt owed or liabilities.
  • The Central Bank figures indicate that while debt levels here have fallen since the low point of the crash, Irish households remain highly indebted by European standards.
  • Overall, Irish households owed just more than €138 billion, which equates to €28,423 per person, the lowest level since 2005. As a proportion of disposable income, household debt was 128 per cent, which was the lowest level recorded since 2004 but still the fourth highest in the European Union. Since its peak of €204 billion in the third quarter of 2008, household debt has decreased by 32 per cent or €66 billion.

PAYE Modernisation is commencing on 1st January 2019. With real-time reporting soon coming into play, there are a number of important points for employers to consider.

The key change is that payroll data is to be supplied to the revenue each pay-period in real time. This change to real-time reporting will ensure that Revenue has the most up-to-date pay and tax deduction information for each pay period instead of waiting for the year-end filing of the P35 return, as happens at present.

The new process is briefly outlined below.

  1. Revenue Payroll Notification (RPN):Employers will need to check for RPNs each pay period, this will replace the current tax credit retrieval process (P2C). RPNs can be requested via your payroll software or through Revenue Online Service (ROS), they will be available from mid-December 2017.
  2. Payroll Submission Request (PSR)A PSR will be used to provide payroll data to Revenue each pay period, and will be required to be submitted to Revenue ‘on or before’ each pay period. PSRs eliminate the need for P30s, P35s, P45s and P46s. In addition, P60s will no longer be issued to employees and will effectively be replaced by an “end-of-year statement”. At the year end, employees will be able to view and print their official certificate of earnings and deductions from Revenue (MyAccount).
  3. PaymentEvery month, Revenue will issue a statement with payroll submission totals. Employers can either accept the statement as a monthly return or correct payroll data if the statement is incorrect. If an employer does not accept or edit the statement, Revenue will deem it to be accepted. There will be no change to payment arrangements, payment due dates will remain the same (If you pay and file on ROS the deadline is the 23rd of the following month).

SCK Group offers a comprehensive outsourcing payroll solution, and is fully prepared to assist you and your business with the transition to real-time reporting, contact us for a free consultation.

 

Irish Water have finally agreed to accept tenant details from landlords with regard to registering for water charges. Prior to this the tenant had to register and if they did not, the landlord faced the possibility of being billed for the tenants water consumption.

With Irish Water agreeing to accept tenant details from landlords, the tenant can now be billed directly for their water consumption.Further information is available on Irish Water website (link below).  At SCK Group, for all properties that we manage for you, we will be registering your tenants with Irish Water over the next couple of days, so in this case there is no need for you to do anything further.

http://www.water.ie/news/irish-water-launches-camp/

 

Property Clinic – The Irish Times  3rd July 2014

 

Q I bought an apartment in a large complex in Dublin in 2006. I could initially afford my service charge payments in addition to my mortgage repayments as I was on a reasonable salary. As with a lot of people, I took a significant pay cut in the height of the recession and found myself struggling to make all of my repayments.

I missed a few service charge payments and eventually stopped making these payments altogether. I know for a fact that there are other owners who have done the same or similar.

There is now a new management company in place who are chasing my backlog of missed payments and the service charge has also increased. I cannot afford to pay this amount and don’t really see why I should if others aren’t also.

What’s the worst that could happen if I ignore these reminders and if it’s a case that I really must pay them, is there a way to seek that they be reduced or that I don’t have to pay the backlog?

 

A You would be aware that you must pay your service charges as your solicitor would have advised you on your contractual obligation to do so when you purchased your property. You will also recall signing documents when you purchased your property, thus you were entering into a contract with the owners’ management company (OMC). The lease agreement binding you as a property owner to the OMC is, amongst other things, an obligation to pay service charges in full to your OMC for the running of the development each year.

The consequences for your actions or lack thereof are that your fellow members have been forced to pay twice; once to cover your costs whilst you did not contribute and secondly to pay for legal proceedings to recover the money you owe.

A competent and functional OMC would arrange for debt collection proceedings against its debtors so that the company can remain solvent and that paying members can see evidence of equity to ensure they continue to pay.

The legal process would be as follows: firstly issue a demand letter advising of the monies due to be repaid within a short period of time to the OMC. If you fail to respond to the solicitor’s letter with payment or to acknowledge the letter, the solicitor will make an application to the relevant court for judgement. There would not be a need for a court hearing if you choose not to defend.

The relevant court of jurisdiction will depend on the money you owe, that is: the District Court for sums not exceeding €15,000; the Circuit Court for sums not exceeding €75,000; or, the High Court for sums over €75,000.

If you choose to defend, the case will be heard by a judge. Once the OMC has a judgement against you, they may wish to publish the judgement by way of reference to the register of judgements through an organisation like Stubbs Gazette.

They may also seek to enforce the judgement from a variety of options including: referring the matter to the Sherriff who will have powers to collect the monies due from you or recover assets from you; seek an instalment order against you meaning you would be required to attend the court to provide it with a statement of means so the appropriate amount of regular instalments required to clear the debt can be determined; or, seek a judgement mortgage meaning a judgement against your property will be registered.

In recent years the latter option of a judgement mortgage was not favoured as the property would be worth less than the mortgage value and as such the bank would have a preference on the property over any existing burdens. It may now be that if the property was sold there would be sufficient funds to cover any burdens and the money owed to the OMC. The OMC may then seek to have the property sold and have the debt paid from the sale by way of a Well Charging Order and the Order for Sale. As you say many people have had their income reduced so it is unfair to your fellow members to expect them to cover your service charge payments when they may well be experiencing similar pay cuts to you.

Your predicament is grim and you should act immediately. I would recommend you liaise with the OMC and try to arrange an amicable payment plan. You may also wish to seek independent legal advice. FLAC or MABS will be of assistance to your cause if you are unable to arrange for a solicitor.

As I have outlined, there are many consequences should you fail to sort this out amicably, not only for yourself but your fellow members may be forced to pay higher service charges by way of legal fees and thus, there would be less funds available for maintenance and repair of the development, meaning the sale price or rental value will decrease for all of the units.

 

Paul Huberman sits on the Property and Facilities Management Professional Group of the Society of Chartered Surveyors Ireland scsi.ie

http://bit.ly/1oqRfuP

This question appeared in today’s Irish Times and raises the age old problem of how to handle a situation where tenants leave without notice and leave your property in bad condition.  At SCK Group we have helped landlords with similar problems and have made representations on their behalf to the PRTB.

I rented my apartment to a couple and the lease is up at the end of the month. However, when I contacted them they told me that they had already moved out and had put the key in the post and that I can keep their deposit as the last month’s rent. I have since been to the property and it’s filthy with some damage to the furniture and some items missing. I have the tenancy registered with the PRTB but am not sure what to do. I tried to contact the utility companies to see if the bills are paid but they won’t talk to me due to “data protection”. What should I do?

A This is a most unfortunate position to find yourself in but one that does happen from time to time. It is good that you have registered the tenancy with the Private Residential Tenancies Board (PRTB) and the benefit of that will now be apparent.

Photograph the property with a date camera before you start the clean up. List all items that are missing. Obtain a quote for the repairs and replacement of the missing items. It can often take a few days to really check the property so make sure that you pick up on all damage. You can download a claim form from the PRTB website, prtb.ie, and I would recommend making a claim against the tenant for the damage. Provide their PPS numbers to the PRTB in the first instance.

If you are still in contact with the tenants, ask them to provide you with a forwarding address which will allow you to transfer the utilities back into your name and the utility company will send any outstanding bills to them at their new address. Take the meter readings and make the transfer by email keeping a record of each transfer.

You should seek compensation from the tenant in the first instance for the damage and missing items at the cost to you to make good and replace. If they refuse this request, you should then proceed with the claim to the PRTB.

The PRTB process will require you to provide clear evidence of the damage and you will be asked to provide receipts for any expenditure. Be careful only to seek compensation for issues that would be beyond normal wear and tear as this is allowed under the Residential Tenancies Act and can be hard to quantify.

Try to have all communication with the tenant recorded either by email or text. The tenants appear to have been unreasonable in their behaviour and so you must demonstrate that you are reasonable in your management of the issue. If you can’t resolve it amicably, the only route for you is to go through the PRTB.

Fergal Hopkins is a member of the Society of Chartered Surveyors Ireland (SCSI)

In today’s Irish Times Property Clinic supplement some interesting questions are addressed about Self-Management of Multi-Unit Developments by OMCs (Owner’s Management Companies) and the pitfalls that should be avoided by such an undertaking. i.e. Licensing requirements, Financial Controls, Protection for the OMC against negligent decisions etc.

Continue reading…

Within the next 2 weeks or so, you will more than likely receive a letter from Revenue with details of the new Property Tax (LPT).  Your may not even receive a letter, but you will still owe the tax.  This is a self-assessed tax and it will be up to property owners to decide how much property tax they are obliged to pay and then to make sure they pay what is owed to Revenue.  With very few exceptions, anyone who owns a Residential Property in Ireland, whether owner-occupier or landlord will have to pay the tax.

Revenue will provide owners will an initial estimate of  their property tax but it is up to each owner to decide on the actual valuation of their property and pay the tax owing.  In fact, Revenue can pursue individual owners for under-payment of the tax, even if the owner has paid the amount that has been recommended by Revenue.  Property owners are expected to take into accounts factors which may affect the value of their property, such as the state of repair, home improvements, extensions etc.  The tax is calculated at 0.18% of the value of the property and only half the annual tax is due for 2013, with the full year’s tax due in 2014.  Revenue have referred property owners to the Irish Property Price Register at www.propertypriceregister.ie to assist them in valuing their properties.

Properties valued below  €1m, will fall into market value bands of €50,000, i.e. €100,001 – €150,000; €150,001 – €200,000 etc. The tax is calculated at the mid-point of each band, so two properties valued at €165,000 and €195,000 respectively, will both pay €157 in property tax this year, and €315 in a full year (2014), which is 0.18% of €175,000.

The market value of your property on 1st May 2013, will form the basis for the property tax due for 2013, 2014, 2015 and 2016.  Property owners do not have to take into account any subsequent improvements to their property or any changes in market value up to 2016.  Revenue will be issuing guidelines to property owners on how to value their properties and have said that if owners follow the guidelines honestly, they will accept owners’ property value assessments.

If you complete your return online, you have until 28th May 2013 to do this but paper returns must be submitted no later than 7th May 2013.  The correspondence from Revenue will give you a Property ID and PIN, to enable online submission.  You will also need your PPSN.  There will be a number of payment options, from single payment option, credit/debit card, salary/occupational pension deductions or deductions at source from social welfare payments. A single payment will be debited from your bank account no earlier than 21st July 2013.  Installment payments through Salary/Occupational Pension deductions will commence in equal amounts from 1st July 2013, and direct debit installment payments will commence on 15th July 2013.  Whatever payment option you choose will continue for 2014 and subsequent years, unless you advise Revenue that you wish to change your payment method.

There is an article in today’s Irish Times about how apartment owners’ are becoming more involved with the management of their developments, since the introduction of the Multi-Unit Development Act (MUD) last year.

Following years of mismanagement by some Property Management Agents, in which property owners saw costs rise out of control, Property Owners are each entitled to one share of the Owner’s Management Company (OMC), under the new MUD Act.  This has led to property owners becoming more involved in the running of their developments by appointing their own agent and re-tendering for maintenance services, such as cleaning, gardening etc and thereby reducing their costs, and each owners annual service charge.

At SCK Group, along with our partners in Pinnacle Property, we are already working with a number of OMC’s in developments around Ireland, where we undertake some or all of the services required, depending on the individual requirements of each OMC.  For example, we can undertake everything from maintenance, service charge collection, accounts etc or if the OMC wants to retain some of these functions itself, we can offer a more limited support service such as service charge invoice/statements, budgeting and general advice on property management.

http://bit.ly/SGStoV

 

Many landlords may be worried following recent reports that banks (EBS, AIB & Bank of Ireland), may attempt to collect rental income directly from tenants for those properties where the landlord is in arrears on mortgage repayments.  A report in today’s Irish Times points out that there may be some legal difficulty in this regard.  Also, the banks appear to be to be keen to stress that this will not apply to small investors.  It seems that the bank is targeting those landlords, some who have moved abroad, who use their rental income for other purposes and have allowed arrears to build on their buy-to-let mortgages.

At SCK Group we have been helping landlords maximise their rental income through Rent-Monitoring and where properties are difficult to let because they are in bad repair, through our Property Refurbishment Scheme.  We also negotiate with lenders on behalf of landlords.

http://bit.ly/MOmJLS

 

SCK Group • PSRA Licence No. 002859
Seamus C. Kane T/A Seamus C. Kane and Associates is regulated by the Central Bank of Ireland
Seamus C. Kane T/A SCK Financial Services is regulated by the Central Bank of Ireland