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Corporate Benefits Presentation

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Patrick McGarry

on 25 March 2014

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Transcript of Corporate Benefits Presentation

- The ‘calling in’ of company loans
- The costly interruption in day to day business
- The loss of Business Contracts
- The cost of recruitment and replacement of the key individual

Company Pension Needs
Company Defined Contribution Schemes
Company AVC Schemes
Group PRSA Schemes
Individual Executive Pension Arrangements
Lennon Earley Crotty Insurances Ltd
Life & Pensions
As an Independent Broker, we provide our Clients and their Staff with a full appraisal of their Pension needs for both pre-retirement and post-retirement
Group Death-In-Service Life Cover

Group PHI Cover

Business Protection
Shareholder Protection
Key Person Insurance
Loan Cover Insurance


Company Defined Contribution Scheme
A Pension Scheme set up by an Employer who must contribute (min.10% of annual contributions) in order to provide Retirement Benefits for their Employees.

The Retirement Benefits received will reflect the value of the Pension Fund that has been built up during the Employees’ service to the Company.

The fund value will depend on the amount the Employer and Employee have contributed to the plan, the duration of the contributions and the investment performance of the fund minus any charges applied to the plan.


Company Defined Contribution Scheme
Employer Benefits
The Employer can write off the full cost of providing the benefits against Corporation tax

The Scheme can provide Retirement and Death Benefits in the one package

Helps Employers to attract and retain valuable staff

Employers can reward loyal Employees in a tax-efficient way

The Employer organises the pension plan and makes an agreed contribution into it on behalf of the Employee. There is no BIK liability to the Employee.

Employee contributions are taken from salary at source
(i.e. before any income tax is deducted).

Employees receive income tax relief on their contributions at the marginal rate and any investment growth on their fund will accumulate tax free. Therefore, it is extremely tax efficient.

Charges are generally lower for group pension plans than for individual policies.

Company DefineD Contribution Scheme
Employee Benefits
Additional Voluntary Contributions
Additional Voluntary Contributions (AVCs) are extra contributions which Employees can make towards their pension. Making AVCs is a good option for Employees to maximise their level of Retirement Benefits.  

AVCs are treated as normal Pension Contributions for tax purposes (within Revenue limits). AVCs qualify for tax relief at the marginal rate of tax. Any investment growth achieved is also tax free.

3 ways to set up AVCs
- Main Pension Plan – AVC Scheme – Deducted at source
- Employer PRSA AVC Scheme – Deducted at source
- Private PRSA AVC Policy – Not deducted at source

AVC payments are generally made through the Employer’s payroll process, any tax relief allowed is applied automatically.

The Employee decides the amount of AVC (within Revenue limits), the Employer will arrange for the AVCs to be paid into the Pension Plan directly from salary and will also apply the appropriate tax relief. The Employee’s take-home pay will be reduced accordingly.

An Employee can also make one-off lump sum contributions to their AVC fund (within Revenue limits) if they choose.

AVCs set up outside the payroll process will not automatically obtain tax relief. The Employee must apply to their local Inspector of Taxes for a refund of tax in relation to this type of AVC contribution.
Where an Employer is not in a position to provide an Occupational Pension Scheme for staff they are obliged to provide their staff with access to a PRSA.

A PRSA is designed to enable Employees to save for their retirement in a flexible manner and also lets an Employee take their Retirement Fund with them when changing job.

A Group PRSA Pension Scheme is a platform where PRSAs are administered on a group basis.

Group PRSA
Employee Benefits
Employee PRSA contributions are tax efficient. Tax relief at source is available at the Employees marginal rate (within Revenue limits).

The Employee owns the policy and can continue contributing after leaving the Employment.

Contributions to a PRSA are very flexible, an Employee can vary their contributions, make one off contributions and take premium holidays if they wish.

Employees who leave employment can take Early Retirement Benefits from their PRSA from age 50.

There is no limit to Retirement Benefits provided by a PRSA.

Group Life Assurance Cover
Group Death in Service cover is Life Assurance ( up to 4 x times gross salary) provided by a company for its Employees.

It provides a Tax free Lump Sum and possibly a Dependent’s Pension Benefit on the death of an eligible Employee.

underwriting requirements are much less stringent than for individual Life Assurance. In most cases a ‘non-medical ’ limit (no medical underwriting) is set. Employees with benefits below this limit will not be required to submit any details for further medical underwriting.

Group Life Assurance Cover
Employer Benefits
An Employer can write off the full cost of providing the benefits against Corporation tax.

As cover is organised on a group basis, costs are significantly lower than equivalent individual Life Assurance cover.

It is an attractive benefit that the Employer can offer current and future Employees.

administration for the Employer is much more straightforward than purchasing equivalent Life Policies for each individual Employee.

Group Life Assurance
Employee Benefits
Company Protection Needs
New Schemes
Existing Schemes
Active Members – Regular Pension Reviews
Deferred Members – Leaving Service Options
At Retirement - Tax Free Cash
Pension Annuities or AMRF/ARF
Group Life Assurance
What is needed to provide a quote?

An Employer Proposal form accompanied by …
A full list of the Members to be covered
Their Date of Birth / Gender
Gross Salary
Amount of Cover (Up to 4 x Times Salary)
Preferred Payment Details (Direct Debit or EFT).

Loss of income due to death, illness or injury is a very real concern for employees and their families

Employers can address this fear by putting in place group protection schemes


Group Protection
Group Income protection Cover
Income Protection is designed to provide an income for Employees if they are unable to work for a prolonged period of time due to illness or injury.

Payment begins once a ‘deferred period’ (usually 13 or 26 weeks) has passed since the onset of the condition leading to the claim.

Group Income Protection is cover provided by a company for its Employees.

with most group income protection cases a ‘non-medical ’ limit (no medical underwriting required) is set. Employees whose benefit is below this limit will not be required to submit any details for further medical underwriting.


Group income protection
Employer Benefits
The Employer can write off the full cost of providing the benefits against Corporation tax.

The Employer is protected against ongoing financial responsibility for an Employee in the event of disability up to the selected policy expiry age.

costs are significantly lower than equivalent individual income protection cover.

It is an attractive benefit that the Employer can offer current and future Employees.

Any Employer contributions to the Employee’s Pension Scheme can also be covered under the Group Income Protection Policy.
Group income protection
Employee Benefits
Group income protection
What is needed to provide a quote?
The premiums are paid by the Employer. There is no BIK liability for the employee.

Underwriting requirements are generally much less strict than for individual Income Protection.

Regular Employee Pension contributions can also be insured through the Group Income Protection Policy.

Benefits payable under the scheme may increase annually in line with inflation.

Peace of mind for Employees and their family.
A quote is then issued confirming the number of members, benefit structure, sum assured, non-medical limit and premium cost of the policy
The premiums are paid by the Employer. There is no BIk liability to the Employee.

Provides financial security to the family of an Employee in the event of that Employee’s death during service.

A Tax Free Lump Sum is paid to the Scheme Trustees on the death of an Employee. This sum is passed on to the Member’s Estate. (Maximum amount paid tax free = 4 x times salary).

If originally selected, an Annual Dependent’s Pension is also paid (taxed as income).

Provides important peace of mind to Employees and their families.
The sudden death or serious illness of a shareholder,director or key employee can cause serious problems for both the company and the individual's family alike
The sudden death or serious illness of a Shareholder in a private limited company can cause serious problems for …

- Loss of Control of the Business
- Shares could pass to 3rd Party (competitor)
- Lack of Liquid Capital / Forced borrowing

Surviving Shareholders
Next of Kin
- An Illiquid Asset
- Forced Sale / Reduced value

Life Assurance can provide a solution to these problems by providing liquid capital to the remaining shareholders to purchase the deceased’s shares from his estate.
The sudden death or serious illness of a key employee in a company can also give rise to a number of immediate financial pressures
Key Person Insurance is life Assurance effected by an Employer on the life of a key Employee (who may also be a Shareholder or Director) to protect the Company against the financial consequences of that individual's sudden death or serious illness.

business protection
- shareholder protection

- key person / loan cover protection
let's take a look at...
shareholder protection
why key person / loan cover protection?
Personal
Shareholder Protection
A Personal Agreement is put in place between all the Shareholders to ‘buy out’ a deceased Shareholder’s shares in the event of his/her death.

Each Shareholder takes out a Life Policy for the value of his/her shares with the proceeds payable to the surviving Shareholders.

The surviving Shareholders use the proceeds to ‘buy out’ the deceased’s next of kin in accordance with the Agreement.

The cost of the Life Policy is bourn by the individual Shareholders out of after tax income. If the Company funds the premium, each shareholder is liable to BIK.

Corporate
Shareholder Protection
The Company enters into an agreement with each Shareholder to ‘buy out’ their shares in the event of his/her death.

There are a number of legal and financial conditions which need to be satisfied to ensure that Corporate Shareholder Protection is appropriate and tax efficient.

The Company takes out a Life Policy on each Shareholder for the value of his/her shares with the proceeds payable to the Company.

The cost of Life Policy is bourn by the Company – No BIK liability to the individual Shareholders.

Key Person Protection
Two important distinctions...
If the purpose of the cover is to protect a Company Loan then the proceeds are likely to be treated as a Capital Receipt for the Company. So no Corporation Tax liability arises for the Company.

If the plan is to protect loss of Profit or replacement costs then the proceeds are likely to be treated as a ‘Revenue Receipt’ and subject to Corporation Tax.
Where the cover is required for both loan cover (Capital) and loss of profit cover (Revenue) we would recommend two separate policies.

Lennon Earley Crotty Insurances Ltd
Corporate benefits presentation
Employee Needs

Lennon Earley Crotty provide one to one Financial Consultations onsite to Company Employees.

Employers facilitate us in offering personal financial advice to their staff on an ongoing basis.

General consultations focus on the key personal financial areas such as Retirement Planning, Family Protection, Savings and Investments.


Email :dmcgarry@lecinsurance.ie
Mobile : + 353 87 2562491
Direct : + 353 1 8330056
Web : www.lecinsurance.ie
Lennon Earley Crotty Insurances Ltd
David McGarry
QFA, RPA
Lennon Earley Crotty Insurance Brokers Ltd
8-9 Marino Mart
Fairview
Dublin 3
Just as companies need buildings and contents insurance to protect their fixed assets they also need to protect their human assets In much the same way

why Life & Pensions?
retirement planning
Planning for retirement is now more important than ever. Longer life expectancies mean that many of us will spend up to a third of our lives in retirement.

Retirement planning is crucial to help us maintain our current lifestyle in retirement

Employers play a vital roll in helping employees plan for their retirement.
Group PRSA

The Employer does not have to contribute to the PRSA

The Employer is entitled to Corporation Tax relief on contributions they make to an Employee’s PRSA.

There are no responsibilities for the Employer in respect of
-Trusteeship
-Administration
-Fund Performance
-Compliance

There are no Employer Audit or Administration Fees applicable to Group PRSA Schemes.

Group prsa
Lennon Earley Crotty Insurances Ltd
Corporate Benefits Presentation
David Mc Garry QFA, RPA
Employer benefits
Corporate insurance brokers
retirement planning
we can tailor both group company schemes & individual plans and we have access to all major underwriters in the irish market
protection needs
Lennon Earley Crotty Insurances Ltd - Founded 1985

Vast experience in all types of Corporate Insurance & Assurance.

Access to all major Insurance & Assurance Companies, Underwriting Agencies and Financial Product Producers.

Members of Irish Brokers Association (IBA), Life Insurance Association (LIA), Small Firms Association, Dublin Chamber of Commerce and Insurance Institute of Ireland.



An Employer Proposal form is furnished accompanied by…
A list of the Employees’ covered under the Group Policy
Employees’ Date of Birth / Gender
Precise Occupation / Gross Salary
Percentage Gross Salary to be covered (Up to a max 75% less State illness benefit).
Guaranteed or Reviewable Premiums ?
Indexation and/or Escalation ?
Preferred Premium Payment details (Direct Debit or EFT)
Full transcript