A common question we get asked relates to Inheritance Tax (CAT) on Pensions in the event of death. This is a very valid concern as most people would like to ensure the wealth they have accumulated in their pension goes to their family in the event of their death.
The treatment of pensions from an inheritance point of view is not entirely covered under CAT rules. We have outlined below the treatment of each type of pension:
Pension Type | Inheritance |
|---|---|
Personal Retirement Bond or Buy Out Bond | Lump Sum subject to normal CAT rules and thresholds |
Executive Company Pension & SSAPS (Small Self-Administered Pension Scheme) | Company Contributions = Lump Sum is limited to 4 x Gross Income (subject to normal CAT rules and thresholds) with the balance paid as an Annuity for Life*
AVC & Employee Contributions = Lump Sum subject to normal CAT rules and thresholds |
PRSA | Lump Sum subject to normal CAT rules and thresholds |
Personal Pensions and SIPPs (Self Invested Pension) | Lump Sum subject to normal CAT rules and thresholds |
*Important Note. Transferring an Executive Company Pension or SSAP to a Personal Retirement Bond prior to death will allow for the proceeds of the Pension to be paid as a Lump Sum, subject to normal CAT rules and thresholds
CAT Thresholds
Group A | Group B | Group C |
|---|---|---|
€335,000 | €32,500 | €16,250 |
Applies where the beneficiary is a child (including adopted child, step child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child, | Applies where the beneficiary is a brother, sister, niece, nephew or lineal ancestor or lineal descendant of the disponer | Applies in all other cases |
All inheritances over these amounts are subject to CAT at 33%
Please feel free to contact us by filling in the contact form or by reaching out to us at:
Email: jfenelon@guardianwealth.ie
Dublin: 01 5267770 Wexford: 053 9110380
Serving Dublin, East Coast, Midlands & South East
Testimonial
Drawing down my Pension was a big financial decision and I was very happy I chose Guardian Wealth. Michael clearly explained my options to me and dealt with my insurance company to make sure it went smoothly. I now meet with Michael every year to make sure my retirement plans are on track. I have no hesitation in recommending Guardian Wealth.
Dr Declan Woods
Carlow
