Pensions and auto-enrolment

Pots and contributions

Each person has a defined-contribution pot (an occupational scheme, a PRSA or a personal pension are followed the same way) invested as funds with their own mix by age and their own charge.

• The employee's and the employer's contributions as a share of pay, or a schedule by age
• Relief within the age-related limits and the earnings cap
• A self-employed person's contribution is paid only from what the month can spare; an employee's can be paused when money is tight, if the household chooses

At retirement

• The lump sum within one lifetime set of limits across every arrangement, counting lump sums already taken; taxed in its bands, with USC on the top slice
• The Standard Fund Threshold for each person, counting benefits already taken, rising with earnings after its legislated years; the charge net of the lump sum's credit
• An ARF with the imputed distribution (s.790D) from the age it applies, trued up each December, and PRSI where it applies
• An annuity, level or rising, with a survivor's share priced on both lives

Defined benefit, and another pension

A defined-benefit pension for each person, preserved or in payment: its increases, commutation, the benefit-crystallisation value at its age-related factor, and a scheme survivor's pension (to a cohabitant only where the scheme provides one). A pension already in payment from a former employer or a late spouse is entered as another pension.

Drawn early when money runs short

When the household cannot pay what is due, a pension is drawn early, as a retirement would be: from the age a leaver can draw once out of the job, or the age the law allows anyone. A self-employed person cannot draw before 60 unless they are a director.

At a death

• An ARF passes to a spouse untaxed; to a cohabitant it is taxed as the deceased's income, the rest an inheritance
• A pot not yet drawn is paid out tax-free, a stated assumption
• The estate's ARF rules (s.784A(4)) apply where the estate charge is switched on

Auto-enrolment

Each person is in the scheme or not, enrolled automatically or by choice, and never beside an employer-funded pension. Rates follow the scheme's calendar years, the cap applies to the calendar year's pay, and contributions stop at pensionable age, when the fund joins the pot. At a death it goes tax-free to a spouse.