Presentation to Presented by:- Noel Hackett (QFA, MIB, Dip Invest) New Ireland Assurance Senior Pensions Consultant Tony Delaney- Area Manager 5th,8th & 9th April 2013. time11.00;13.15;15.00

Benefits at Retirement At retirement your benefits will come from:- State Pension NUIG Scheme Purchase Notional yrs Additional Voluntary Contributions ( AVCs ) Accumulated wealth/savings/inheritances

NUIG Pension Scheme Defined Benefit Scheme Scheme provides Lump Sum ( Gratuity ) Spouses Pension Increases during course of payment Death in Service Benefit Actual benefits depend on when you joined

Key Dates 1995 Future employees pay PRSI and receive 2004 State Pension Lower pension from NUIG 2004 Future employees have minimum RA of 65 Immediate early retirement pension available - Existing employees from 50 New employees from 55

NUIG Scheme – Pre 2004. Normal Retirement Date is age 65. but can retire from age 60 onwards Pension 1/80th x Pensionable Service x Pensionable Salary State Pension not payable (pre 95!) Lump Sum 3/80th x Pensionable Service x Pensionable Salary

Example – Pre 1995 Employee on a salary of €50,000 joined NUIG in 1990 at age 30 Service to age 60 is 30 years Pension from 60 is €18,750 p.a. 30/80ths x €50,000 State Pension not payable Tax Free Lump Sum is 90/80ths of €50,000 - €56,250

NUIG Scheme – Post 1995 Normal Retirement Date is 65, BUT can retire…. Pre 2004 employees – From age 60 Post 2004 employees – From age 65 Pension 1/200th Pensionable Service x Pensionable Salary Plus 1/80th x Pensionable Service x Pensionable Salary State Pension also payable Lump Sum 3/80th x Pensionable Service x Pensionable Salary

Example – Post 1995 Employee on a salary of €50,000 joined NUIG in 2000 at age 30 Service to age 65 is 35 years Pension from 65 is €11,396 p.a. 35/200ths x €40,040 = €7,007 pa 35/80ths x €9960 = €4,357 pa State Pension also payable Tax Free Lump Sum is 105/80ths of €50,000 - €65,625

State Pension From 2012 Applies to all employees who joined since 1995 Single Person €230.30 per week Married Couple €383.80 Applies to all employees who joined since 1995

Early Retirement Was always allowed but only as a deferred pension Changes from 2004 Existing employees from 50 New entrants from 55 Immediate pension payable Early payment reduction

Early Retirement Benefits – NRA 60 Employee on salary of €50,000 joined before 1995 - early retiring at 55 Service completed 25 years Pension : 77.8% x 25/ 80ths x €50,000 = €12,156 Tax Free Lump Sum : 90.7%x 75/80ths x €50,000 = €42,515

Employee Contributions Contributory for new Entrants post April ’95 Total Contribution Rate is 6.5% Lump Sum 1.5% Pensionable Remuneration Pension 3.5% Net Pensionable Remuneration Spouse/Civil Partner & children’s pensions 1.5% Pensionable Remuneration

Bridging the Gap - 2 Options Purchase of Notional Years of Service Through NUI Galway Pensions Office AVC Scheme Through New Ireland Assurance

Notional Years Employee can buy “notional years” Defined Benefit basis Must buy year with all the “trimmings” Pension Gratuity Spouses Pension Pension Increases

AVC Scheme You can pay into the AVC Scheme No promised benefits – will depend on Investment Returns Annuity Rates – if you buy a pension at retirement Can be more flexible than added years, you can Select a monthly contribution Save for a specific benefit - lump sum only ARF option

Scope for AVCs Did you join after 1995 ? Do you Is your Pension lower than Revenue will allow Do you Wish to retire early ? Have short service ? Want to provide a higher Spouses Pension Is your Pension & Lump Sum based on your final (cut) salary Scope to enhance this - “Revenue Final 10 year salary rule”

Additional Voluntary Contributions Government incentive through:- Tax Relief, at source Generous contribution limits ARF option – greater flexibility at retirement NB – Pension Fund levy of .6% of fund will cease in 2014

Employee Tax Relief Limits (including AVCs) Age % of Remuneration Up to 30 15% 30 – 39 20% 40 – 49 25% 50 - 54 30% 55-59 35% 60 Plus 40% An earnings cap of €115,000 (2013) will apply to Employee Pension Contributions for the purpose of tax relief. The above limits include contributions to NUIG Pension Scheme

Tax Relief Monthly Contribution €400.00 Tax Relief €80.00 €164.00 Net Cost €320.00 €236.00 Contributions and tax relief operated at source

USC for self assessed under age 70 the 2013 rates Part of aggregate income Rate of USC First €10,030 2% Next €5,980 4% Next €83,984+ 7% Income > €100,000 10%

TAX CREDITS 2013 2010 2013 € € Employee Tax credit 1,830 1,650 2010 2013 € € Employee Tax credit 1,830 1,650 Personal tax credit-single 1,830 1,650 -married 3,660 3,300 Widowed bereaved in yr of ass. 3,660 3,300 One parent family tax credit 1,830 1,650 Home carer tax credit 900 810 Dependant relative 80 70 Blind person credit-single 1,830 1,650 both blind -married 3,660 3,300 Additional credit widowed pers 600 540 Age credit-single 325 245 Age credit married 650 650

AGE EXEMPTION LIMIT Standard Rate Bands € € 2010 2013 € € Single/Widowed 36,400 32,800 Married-one income 45,400 41,800 *Married-two incomes 72,800 66,500 One parent/Widowed 40,400 36,800 With a max transferability between spouses of €45,400 in 2010 and €41,800 in 2011 AGE EXEMPTION LIMIT Single €20,000 €18,000 Married €40,000 €36,000 Unchanged for 2013.

Example Employee aged 45 on a salary of €60,000 who joined post 1995 Maximum AVC contribution is:- 25% of €60,000 €15,000 Less 1.5% of €60,000 € 900 Less 3.5% of €60,000 - €23,951 € 1,262 Scope for AVC €12,838

Actual AVC Member – Example Mary Murphy Retired in April 2010. 29yrs service. Age 65. Salary €59,000 NUIG Pension €12,705.38p.a. NUIG Tax free lump sum €64,162.50 AVC Fund built up in 5 yrs @ €300pm = €21,075.30 Net cost, after tax relief for Mary was€10,620.00 that she paid TAX free lump sum from AVC is €21,075.30 Could have been €24,337.50 from AVC if it was in her fund. Tax free LUMP SUM approved by Revenue is €88,500

Options at Retirement Tax Free Lump Sum ( Up to €200,000 ) Ongoing Pension Personal Spouses Approved Retirement Fund ( ARF) Minimum income of €12,700 Invest €63,500 in AMRF Free to invest as you wish Withdrawals taxed as income

AVC Drawdown For next 3 years Care needed before drawdown considered Draw down up to 30% of AVC Fund Tax payable at your marginal rate Only one “ opportunity” to make a drawdown Care needed before drawdown considered

Making it easy to track your Fund Pensions Schemes Online Password protected website Information on premium history fund value Estimated fund at retirement It is free and easy to use Review yearly – especially if circumstances change

Investment Options There are13 funds available to Invest in including the Default Fund The IRIS Retirement Fund Strongly recommend all members to review their fund choice with Noel Hackett

Default Investment Strategy Your AVCs will be invested in the default strategy if you don’t chose a fund The Default Strategy is the Individual Retirement Investment Strategy ( IRIS ) The longer the term is to retirement, the higher the proportion invested in equities and other growth assets As retirement approaches, the purchasing power of the fund is protected by switching into Fixed Income Assets/Cash

Improvements to IRIS Improvements implemented in December 2012 Part of the equity content replaced by a Target Return Strategy Two Key Benefits Greater diversification Greater flexibility

IRIS Glide Path – Default Fund

IRIS Performance – to 1st March 2013

Other Investment Options Low Risk Cash Fund IRIS- Default Fund- Lifestyle Fund. Medium Risk Pension Gilt Fund BNY Mellon Elements Protected Assets Medium to High Pension Managed Consensus Managed Ethical Managed Evergreen Fund High Risk Pension Equity Fund Innovator

Performance Figures FUND past 12months 3yrspa 5yrspa Cash Fund(L) 0.2% 0.7% 1.6% Gilt Fund (M) 7.7% 5.1% 5.8% BNY Mellon(M) 8.8% 3.6% n/a Elements (M) 4.4% 4.6% n/a Protected (M)assets(M) 4.3% n/a n/a Managed(M-H) 12.5% 9.1% 3.1% Consensus(M-H) 12.8% 9.5% 2.9% Ethical (M-H) 11.8% 9.3% 3.4% Evergreen (M-H) 9.4% 7.7% 1.0% Equity Fund(VH) 14.5% 10.5% 3.4% Innovator (VH) 7.7% 6.3% -1.9% Funds are updated each day. L-low risk M -Medium risk H- High risk VH -Very high risk

Investment Information - New Ireland Website www.newireland.ie Click on Pension I have a pension Public Centre Investment Choice and Performance Up to date fact sheet for each available fund\ performance of each fund over various time periods asset splits, fund size etc

Other Information - New Ireland Website www.newireland.ie Click on Pension I have a pension Public Centre Popular forms and booklets

What Should I Do Next? Pensions Office NUI Galway Contact: Pensions Office NUI Galway Ph 091-495028 ext: 5028 Email : pensions@nuigalway.ie Or: Noel Hackett, QFA, Pensions Consultant New Ireland Assurance Tel 061312166; Mobile 086-8186163 Email: Noel.hackett@newireland.ie

Individual Consultations Available Noel Hackett will be in available for Individual Consultations of 45mins duration (09.00 – 17.00) Pensions and Investments Office 8 Lower Newcastle Road 10th, 11th 12th 15th and 16th April 2013 Contact Ann Cormican or Jacqueline Joyce in Extn 5901/5028 to reserve time. Email: ann.cormican@nuigalway.ie Jacqueline.joyce@nuigalway.ie

Any Questions? Thank You for attending

Cost Neutral Early Retirement Factors to calculate reduced Lump Sum and Pension (Age 60) Age Pension % Lump Sum % 50 62.4 82.2 51 65.1 83.9 52 67.9 85.5 53 71.0 87.2 54 74.3 88.9 55 77.8 90.7 56 81.6 92.4 57 85.7 94.3 58 90.1 96.1 59 94.8 98.0

Cost Neutral Early Retirement Factors to calculate reduced Lump Sum and Pension (Age 65) Age Pension % Lump Sum % 55 58.2 82.4 56 61.1 84.0 57 64.1 85.6 58 67.4 87.3 59 71.0 89.0 60 74.8 90.7 61 79.0 92.5 62 83.6 94.3 63 88.5 96.1 64 94.0 98.0