Author: Sean Lynch

Employment (Miscellaneous Provisions) ACT, 2018

Passed into law 2019

Purpose of the bill

The main point of this new law is to deal with ‘precarious work’, zero hours contracts, and uncertain working conditions for employees in industries which would have relied on a great deal of flexibility in the employment contract; service industries such as retail, hospitality, and tourism for example.

Most employers in these industries have made ample use of flexible working arrangements to meet the needs of their business, especially long working hours and seasonable peaks and troughs in trade and the demand for staff.

Main elements

The significant elements of this bill are

1. The employer must give a written statement of 5 core terms of employment within 5 days of starting employment.

These 5 terms are:
a) the full name of employer and employee
b) the address of the employer
c) the expected duration of the employment contract
d) the method of calculating or rate of pay
e) the expected normal working day and week

2. Banded hours provisions

The employee has a statutory entitlement to a banded hours contract where their contractual working hours over the previous 12 months do not reflect their actual working hours.

This is a guaranteed minimum number of hours, e.g. in band B they are guaranteed a minimum of 11 hours. If the employee requests such a contract he/she must be given the banded hours contract unless:

i) the employee’s claim is not supported by evidence.
ii) there have been significant adverse changes to the employer’s business in the previous 12 months.
iii) the hours worked in the previous 12 months were brought about by a temporary situation which no longer exists.

There are 8 different bands as follows:

Band              From                     To
A                     3 hours                  6 hours
B                     6 hours                 11 hours
C                    11 hours               16 hours
D                    16 hours               21 hours
E                     21 hours              26 hours
F                     26 hours              31 hours
G                     31 hours              36 hours
H                     36 hours and over            

Once an employee is placed on a particular band he/she is entitled to work an average of those hours for the following 12 months.

3. Designation of employees/Independent contracting

An employer can be held liable if she/he incorrectly designates and employee as ‘self-employed’. Fines of up to €5,000 are the maximum penalties.
The employer has a defence, however, if he/she can show that he exercised due diligence and took all reasonable precautions when arriving at the designation.

4. Prohibition of zero hours contracts

Zero hours contracts will be prohibited unless used in specific exceptional circumstances of genuine casual employment and where they are essential for the needs of the business in the short term or in emergency situations.

5. Continuity of employment

Employees who are given a series of fixed term contracts will be deemed as being on layoff and will accumulate ‘continuous service’ for the purpose of protections from various employment law statutes.

6. New minimum payment 

There will be a new minimum payment entitlement for employees who are not called into work on any given week. The employee will be entitled 25% of their weekly contracted hours.

7. Strong penalties for employers

The bill provides strong sanctions against employers for penalising employees who seek to enforce their rights under this bill and also strong penalties for not implementing the provisions of this bill.

Blog provided by/source: Brendan Foley 20-20 HR, Newberry, Mallow Co.Cork.  087-7938641. / Brendan@2020hr.ie / www.2020hr.ie

Different types of Pensions in Ireland

Pensions in Ireland can be structured in different ways. The following are simplified examples of the different types of Retirement plans available on the market.

There are four main types of Pensions in Ireland:

1)      Executive Pension Plans / Occupational Pension schemes.
2)      Personal Pension Plans
3)      PRSA / Personal Retirement Saving Accounts.
4)      Buy-Out-Bond / Retirement Bonds.

Tax relief on all types of Pensions in Ireland:

All personal pension contributions can get Income Tax relief subject to a maximum amount according to your age and your income. In simple terms, for any contribution of €1,000 into your pension, the real cost for you is €600 if you are a 40% Income Tax payer or €800 if you are a 20% Income Tax payer.

Example:

You have made a personal contribution of €10,000 in total into your pension fund.

For a 20% Income Tax payer: your contribution of €10,000 only costs you €8,000 net due to the 20% Income Tax relief.

For a 40% Income Tax payer: your contribution of €10,000 only costs you €6,000 net due to the 40% Income Tax relief.

1)      Executive Pension Plan / Occupational Pension scheme:

This type of plan is set up by Employers who want to contribute into their Employees’ pension fund. Your Employer will choose the provider and what is the charging structure. You will decide the amount you wish to contribute and in what fund you want to invest your money into.

The Employer has to make a meaningful contribution on behalf of the employee i.e. 10% of the employee’s contribution is considered as ‘’meaningful’’.

This means that if you contribute €1,000 gross per month into your pension, then, your Employer will contribute an additional €100 per month into your pension fund. All contributions will be deducted from your gross wages before any Income Tax, USC & PRSI are taken. Income Tax will be due from the net amount left. Currently, there is no tax relief on USC or PRSI.

2)      Personal Pension Plan:

This type of plan can be set up for you if you are a Sole Trader or an Employee with no access to an Executive Pension Plan / Occupational Pension Scheme. This is a private pension. This is not linked to any Employer/Company and all contributions going into it are from you. Your Employer cannot contribute into this type of plan.

You will have the choice between different providers, investment funds and charging structures.  There is no limit in relation to the number of Pensions in Ireland that a person can hold, therefore, you can have numerous Personal Pension Plans with different providers if required.

If all contributions are taken from your Sole trader bank account before the Income Tax deadline, it is taken off from your earnings before personal income tax is calculated.

3)      PRSA / Personal Retirement Saving Accounts:

The PRSA plan is considered to be highly flexible and cost effective. This type of plan can be set up for you in two ways:

a) PRSA set up by you as a Sole Trader:

This is a private pension and it is not linked to any Company or specific occupation/trade. You can continue to contribute into it, even if you change trade/occupation. All contributions come from you as a Sole Trader. Where a contribution is made before the tax deadline it is taken off from your earning before tax is calculated. This is a private pension and you you will be able to search the market for the best options and change providers, charging structures, funds you are invested in if required

b) PRSA set up by an Employer for you as an Employee:

As opposed to the Executive Pension Plan, your Employer does NOT have to contribute into your Employee PRSA. Your Employer only has to facilitate access to a PRSA and facilitate deductions from your salary if the Executive Pension Plan is not an option for you.

All contributions will be deducted at source from your gross wages. As Income Tax relief is already applied there is no tax back to claim afterwards.  Your Employer decides which company will be the PRSA provider.

4)      Buy-Out-Bond / Retirement Bond:

This plan can only be set up for you when a Company Pension i.e. Executive Pension Plan / Occupational Pension Scheme is being wound up by your Employer or if you leave service with an Employer where you have been a member of an Occupational Pension Scheme.

Many people change careers or Employers during their lifetime. You may have accumulated different retirement plans over the years linked to different employments. Sometimes, your previous or current Employer may be unable to maintain your pension scheme and will decide to have the scheme wound up.

In all cases, you will have to decide what to do with your pension fund. One of the options is to transfer your pension into a Buy-Out-Bond / Retirement Bond.

This type of plan allows you to keep the same retirement benefits as the one you had with the Company scheme. It will follow the same rules and same retirement age. The main difference is that the Employer will not be in charge of administrating your pension fund anymore and will not have to contribute into it either. You will become the only owner of the plan and all decisions will be taken by you.

A Buy-Out-Bond only exists in order to carry your pension fund until retirement, you cannot make any new contributions into it.

I hope that the above explanation helps you to understand the different types of Pensions in Ireland.

Please note that I only dealt with pre-retirement pension plans and did not go through Defined Benefit scheme in this article.

If you have any questions, feel free to contact us on 022-57444.

 

Different types of Life Insurance

Life Insurance can be structured in different ways. The following are simplified examples of the different types of Life Insurance.

Decreasing Term Assurance, ”Mortgage Protection”:

The value of the life cover decreases over time to zero. This is ideal for a Capital and Interest loans where the loan is decreasing. In the example below, if the person dies, the policy will pay out approximately €50,000 after 25 years. It is the cheapest of all the life covers because the life cover is getting smaller as you get older.

Guaranteed Level Term Assurance:

As the name suggests, the cover is level throughout the term of years that has been selected. In this example, if the person dies anytime within the 25 years, the policy will pay out €250,000.

Indexation option: This is where by you agree to a set increase each year. This is to keep ahead of inflation. The life cover increases but so does the premium.

Conversion option: Give you the option of converting the policy without answering any medical questions at the end of the original term.

Waiver of Premium option: It ensures that the policy will continue to be in effect even if the policyholder experiences a loss of income. In short, the policy stays in effect even though the premiums are not being paid.

Whole of Life – A Life Insurance for life with 3 options:

Whole of Life Continuation Option:

This consists of two elements:

  1. A Term Assurance that will cease at a specified term of your choosing.
  2. A Whole of Life cover that will continue until paid out.

Importantly – you must select a period and then pay for that period only. The Whole of Life cover continues even though you have stopped paying the premiums. This type of policy can be seen as a funeral savings policy as the money is guaranteed to be paid out when you die.

Whole of Life – Fixed premium:

This provides life cover for the Whole of your Life. The premium and life cover are fixed.

Whole of Life – Reviewable premiums:

This will provide you with life cover assuming you can pay the increasing premiums. There is normally a 10-year review. 5 years thereafter and yearly at the age of 70. This is an older type of Whole of Life and we would not recommend this type of policy as this is very expensive compare to other types of Whole of Life above.

As you get older the cost of the life cover increases. This is because the chance of you dying increases each year. A feature of the Reviewable Whole of Life policy is that some of your premiums are invested. This allows the build-up of a ”Reserve Funds”. The life cover gets more expansive as you get older. The company feeds off this reserve fund to pay out for the Life cover premiums. This will continue until the reserve fund ”Bottoms Out”. At the next review period, the premium will increase to maintain the existing level of cover. There is no limit tot his increase.

The Qifa Team would be happy to discuss Life Insurance or any other services with you. Contact us to day to discuss your requirements on 022-57444.

 

Choosing a Financial Advisor

 

 

Financial Advisor is a broad term. You want to ensure that you are getting the best to help you plan your finances for now and into the future. There are several steps that you need to take.

Ask are they a Certified Financial Advisor?

This means that they have attended and passed a degree level course in Financial Planning. Ir shows a level of commitment and professionalism that most have not achieved. Indeed, some have no qualifications and have been ”grand fathered” into the business. Ask if they have qualifications.

Being a Qualified Financial Advisor (QFA) is the entry level to the financial services business. What is quickly becoming the norm is ”Certified Financial Planner” or CFP. This is a worldwide recognised designation and gives a framework for the Financial Planner to provide advice using an integrated approach from all aspects of the client’s life.

What can I expect from a Certified Financial Advisor?

The first thing any good financial advisor will do is explain the process to you of how he/she will create a meaningful financial plan for your family. This will be an integreted approach that will encompass your lifestyle goals, your dreams aspirations, current financial situation, where you want to be and of course, how you can get there.

What are the steps that a Certified Financial Advisor will use?

Step 1: Setting goals with the client.

Getting to know your goals and aspirations. Establishing what is important to you and, more importantly, why it is important. Establishing what your lifestyle and financial goals are and, of course, prioritising those goals.

Step 2: Discovery Process.

Gathering the hard date to clearly establish where you are now. We look at and review all your existing financial arrangements i.e. debts, credit cards, loans, investments, life and pension policies, mortgages, income and expenditure. This give us a clear starting position.

Step 3: Analysing information.

Analyse all the data received. Then we complete a lot of back office work to match your goals with financial and taxation strategies. At this stage we meet again and discuss our initial thoughts with you and create a series of ‘what ifs’ to stress test them.

Step 4: Develop a financial plan.

Construct a final plan and present the plan to you for final approval. Every aspect of the plan is discussed again until you have clarity on the actions required.

Step 5: Implementing the strategies in the plan.

Every plan must have a call to action to make it effective. We create a list of action points for you. This provides direction and simple steps to follow. Sometime this may necessitate extra paperwork and the staff here atQifa Financial Planners can help you with this.

Step 6: Monitoring & Review.

Once the heavy lifting is done, the journey to financial freedom hasstarted. However, as we are all aware, life has the habit of throwing a few curve balls at us. Therefore, it is important to review your plan andadjust it on regular basis. This is to ensure that your goals remain on track. The team at Qifa Financial Planners is at your disposal to assist you in any way we can.

We have developed our own process called the ”Qifa Life Path”.  The Qifa Life Path experience takes a holistic approach of your goals and objectives to help you achieve your stated goals and live your life to the maximum.

If you want more information from our Financial Advisor or a brochure, please sends us an email at info@qifa.ie or call us on 022-57444. We will be delighted to talk to you.