Company Directors
Pensions are an essential part of your financial plans, both the tax relief and the long-term nature of a pension makes it one of the best retirement planning and wealth extraction tools available for business owners today.
Arranging for your company to make contributions to an Executive Pension in your name can allow you to move cash from the business into what is effectively a pot of money held under trust for you.

An Executive Pension gives you:
Contribution Options
The flexibility at the outset to choose the amount you and your company contribute. Investment Options Which allows you to tailor your investments to suit your individual attitude to risk.
Retirement Options
Retirement Options that suit your circumstances When you retire, there is flexibility as to how the benefits can be taken. This will depend on rules that are in place at the time you take your retirement.
Your options may include:
- A tax free lump sum
- A taxable lump sum
- An income (pension) for your lifetime
- An income (pension) for your dependants on your death in retirement
- Investing in an Approved Retirement Fund (ARF) and/or Approved Minimum Retirement Fund (AMRF).
Using your pensions to extract wealth from your company
Profits in your business – your options
Option 1 – Leave funds in the company, invest them (in non pension based life assurance investment) and extract proceeds through sale of your company
Option 2 – Withdraw funds as salary and invest them personally (in non pension based life assurance investment)
Option 3 – Employer contribution to Executive Pension Plan
Option 1 | Option 2 | Option 3 | |
Initial investment | €100,000 | €100,000 | €100,000 |
Less corporation tax | €12,500 | €0 | €0 |
Less income tax, PRSI & USC | €0 | €52,000 | €0 |
Balance to invest | €87,500 | €48,000 | €100,000 |
Value at 60 | €157,583 | €86,445 | €180,094 |
Less exit tax on growth | €17,521 | €15,762 | €0 |
Total | €140,062 | €70,683 | €180,094 |
Less CGT on sale of your company | €48,220 | €0 | €0 |
Less income tax, PRSI & USC | €0 | €0 | €70,236 |
After tax value at retirement | €93,842 | €70,683 | €109,858 |
Note, a reduced rate of CGT (20%) may apply to certain companies/individuals. Certain business disposals may also be exempt from CGT under the retirement relief provision.
*This information is provided for illustration purposes only
Assumptions
- Investment rate of return 4%
- 15 years investment term
- 12.5% corporation tax
- Income tax 40%, PRSI 4% and USC 8% (52%)
- Exit tax on company owned life policy – 25%
- Exit tax on individually owned life policy – 41% assumed to apply at the end of the investment period only
- CGT 33% on liquidation
- Assumes 25% tax free lump sum is taken and the balance of the fund is subject to Income Tax 40%,
- PRSI 4% and USC 8% (52%)
What happens at retirement?
Taking your retirement benefits
You can choose to take your retirement benefits under your Executive Pension at any age between 60 and 70, which is the Normal Retirement Age under an Executive Pension. It is possible to take benefits at your chosen retirement age (between 60 and 70) and to continue working in the same company. It is also possible to change the chosen retirement age at any point in the future.
Early Retirement
You may be able to take your benefits from age 50 under certain circumstances. In the event of ill health, benefits can become payable immediately (regardless of age) but this is subject to completion of a medical to make sure you qualify under Revenue rules. If you retire early you will need to surrender (sell) your shareholding and sever all links with the business.
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