Global Expat Wealth Manager Launches Advisory Service for Irish Pension Savers Exposed to the Standard Fund Threshold

Chase Buchanan's Irish pension specialist and private wealth manager, Malcolm McDowell launches Irish pension advisory service for Standard Fund Threshold calculations

Paphos, Oct. 27, 2023 (GLOBE NEWSWIRE) -- Global Expat Wealth Manager Launches Advisory Service for Irish Pension Savers Exposed to the Standard Fund Threshold
Global Expat Wealth Manager Launches Advisory Service for Irish Pension Savers Exposed to the Standard Fund Threshold

Leading global wealth advisory firm Chase Buchanan has advised that all retirement savers with Irish-based pension products – regardless of their place of residency – should evaluate their potential exposure to additional taxation where funds exceed the Standard Fund Threshold.

The international group has recently published a series of articles alongside a downloadable guide detailing the tax treatment of Irish pension products above the €2 million cap and the available opportunities to mitigate or remove exposure to unnecessary levels of taxation.

Services available alongside these online resources include virtual and face-to-face consultations, an analysis of pension planning, investment portfolios and other financial assets, and bespoke suggestions to ensure those saving for retirement anywhere in the world take advantage of the tax efficiencies and opportunities available to them.

The Impacts of the Irish Standard Fund Threshold on Pension Taxation

Similarly to the recently abolished Lifetime Allowance in the UK, the (SFT) Standard Fund Threshold calculation, is a cap imposed on the amount of retirement savings any holder can accumulate into an Irish pension fund without attracting additional tax liabilities.

The SFT applies universally to all pension products based within Ireland, regardless of the residency position or location of the fund holder. However, Irish expatriates may be exposed to additional taxation due to the way the Revenue treats non-resident pension wealth above the tax-free lump sum.

The basics of the tax are as follows:

  • An additional tax, the Chargeable Excess Tax or CET, is levied on Irish pension funds at 40%, applied to all assets above the €2 million cap.
  • Effective taxation on those funds can reach as high as 70%, with income tax at the holder’s standard rate applied to the balance.
  • Any Irish-based pension fund that goes over the threshold is exposed, irrespective of by how much or the circumstances. Common examples include defined benefit plans, which the owner may have been assumed to be below €2 million but are then valued above the SFT on retirement.

Funds below €2 million are unaffected and taxed in the usual way. However, the implications are potentially far-reaching and, combined with a limited 25% or €200,000 maximum tax-free lump-sum drawdown, can make the prospect of retaining a pension product within Ireland unappealing.

Pension savers may need to act swiftly should their retirement assets approach the SFT cap since it may be impossible to retrospectively remedy this significant tax exposure. Pensions already assessed for the Chargeable Excess Tax cannot normally be restructured or adjusted once the Irish Revenue recognises the tax liability.

Chase Buchanan’s more comprehensive Guide to Standard Fund Threshold Taxation for Irish Savers and International Expats explores the effective tax rate payable, factors such as crystallisation events and circumstances where pension holders may be unaware of their tax exposure in greater detail.

Solutions for Pension Savers Concerned About SFT Taxation on Irish Pension Products

Malcolm McDowell, SFT and pensions specialist at Chase Buchanan, indicates that with professional financial support, this tax is easily avoided, protecting the ability of any pension fund holder with a product within Ireland to structure their saving and retirement plans without concerns about excessive tax obligations.

He says, “Many clients I consult with have assumed that their only option to avoid paying an effective tax rate of 70% or more against Irish pension funds is to cease contributions. However, it is absolutely possible to take advantage of legislation within Irish tax law to remove your exposure to a tax that is often considered voluntary.

Transferring an Irish pension product to another EU jurisdiction is one such solution, fully compliant and allowable through the EU Directives that permit the movement of capital between member countries and jurisdictions.

The benefits are compelling for many, with greater flexibility to withdraw a larger lump sum, the ability to grow and contribute to a pension fund according to your wishes, and ultimately removing any expectation that you will pay unnecessarily high taxation against a proportion of your retirement savings.”

The Irish Revenue states that any pension fund above the SFT on retirement is liable for the Chargeable Excess Tax without the ability to offset the charge against deductions, allowances or reliefs. However, a tax of 20% paid against amounts drawn between €200,001 and €500,000 may be offset – with a minimal impact on the total taxation value.

Professional Advice Around SFT Pension Tax Liabilities

Once an individual retires or reaches another crystallisation event, such as a threshold age or accessing a pension lump-sum, the provider, trustees or administrators of their pension fund are obliged to submit a document called Form 787S to the Revenue. They must deduct the payable value against the CET from the fund and submit it to the tax office within three months.

At this stage, there is no recourse or remedial solution open to pension holders. Any decisions to transfer a pension product should be taken well in advance of an expected assessment or retirement date or a point at which a fund owner wishes to make a lump-sum withdrawal.

Malcolm adds, “Pension transfers are one possible option, which can effectively remove considerable tax liabilities and provide additional benefits such as eliminating value-based restrictions on the lump-sum value a pension saver can draw from their retirement wealth.

For Irish expatriates now considered non-residents, the advantages are more substantial, where they are at risk of being exposed to additional taxation both by their country of residence and the Revenue based on the treatment of non-resident pension wealth as ‘Emoluments’.

As a MiFID licenced advisor, I am authorised to provide professional, tailored advice and offer both online and in-person consultations to discover the best strategy for you, using the appropriate options to reduce your exposure and apply the correct Irish and EU regulations.”

Pension fund holders are advised that an Independent Finance Adviser, or IFA, must be MiFID licensed to be able to offer advice on EU-wide pension transfers, a status rarely found within the Irish financial advisory sector.

Read more about the Standard Fund Threshold: Pension Lead Advises Irish Pension Savers to Take Action on Standard Fund Threshold Tax Penalties

About Chase Buchanan Private Wealth Management

Chase Buchanan is a highly regulated wealth management company that specialises in providing global finance solutions for those with a global lifestyle. We are global financial advisers, supporting expatriates around the world from our regulated European headquarters, and local offices across Belgium, Canada, Canary Islands, Cyprus, Malta, Portugal, Spain, UK and the USA.

Chase Buchanan Ltd is authorised and regulated by the Cyprus Securities and Exchange Commission with CIF Licence 287/15.

Media Contact:

Malcolm McDowell
Chase Buchanan Ltd
+44 (0) 1252852045


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