|
Under current Irish tax law the options available for transferring your UK pension into
an Irish based fund are restricted.
There is a reciprocal agreement between both countries allowing the transfer of an
employee to an Irish based sister company while preserving that person's rights and
benefits. Further under the Irish Finance Act 1972 a member of a UK occupational scheme
can transfer their fund to an Irish occupational scheme approved under the Act.
Transfer values from a UK Retirement Annuity Contract issued prior to 1 July 1988 or
from a UK personal pension scheme are not permitted.
Declan O'Neill, a Financial Services Consultant based in West Cork and a member of the
L.I.A. says, "the fund managers may have to retain part of the fund to cover the cost of
transferring and this may prove to be too expensive. The alternative would be to close off
the fund in the UK and start a new one in Ireland. Each case should be looked at
individually to establish whether it is beneficial to transfer".
|
We selected some typical personal outgoings for an individual noting their costs in
both Ireland and the UK. When converted to Irish pounds it is clear that the UK is more
expensive to live in.
Appendix 2 compares the total annual costs in IR£ in both
countries and shows that overall for the items selected they will cost 28% or IR£4,549 less in
Ireland than in the UK. Assuming that on average 60% of a person's net income is spent on
personal outgoings then we can compare the cost of living in both countries given that costs are 28%
less expensive in Ireland. This is a general distinction between the cost of living in both
countries and individual living costs would have to be reviewed separately to give
specific advice. If we refer to Appendices 1, 1A and 1B, as follows:
Appendix 1
An individual earning IR£40,000 may receive IR£8,907 less take home pay in Ireland but
this will be fully compensated for by the reduction in living costs of IR£9,980.
Appendix 1A
A couple both earning IR£40,000 may each receive IR £8,907 less take home pay in Ireland
but all of this would be compensated for by the reduction in living costs of IR£9,980
each.
Appendix 1B
A married couple with a single income of IR£40,000 may receive IR£5,826 less take home
pay in Ireland but this would be fully compensated for by the reduction in living costs
of IR£8,595.
Finally, it should be noted that you may not be able to maintain the level of salary
received in the UK, particularly if you are coming to rural Ireland from London. However,
there will be exceptions to this, and as a general rule your gross salary may be 10% less
than in London. Returning to Appendix 1, 1A and 1B as follows:
Appendix 1
The individual would earn IR£ 36,000 gross and receive IR£8,135 less take home pay in
Ireland all of this will be compensated for by the reduction in living
costs of IR£9,086.
Appendix 1A
The couple would both earn IR£36,000 gross and each receive IR£8,135 less take home pay
in Ireland though all of this will be compensated for by the reduction in living
costs of IR£9,086 each.
Appendix 1B
The married couple would earn a single income of IR£36,000 gross and receive IR£5,052
less take home pay in Ireland but all of this would be compensated for by the reduction
in living costs of IR£7,756.
|
