Your personal finance questions – Pensions options, insuring your tools and the fisher tax credit

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Charlie Weston Twitter Email

October 02 2021 02:30 AM

Q As I approach my retirement, I have been thinking more about my pension options and how best to manage my fund as I get older. I would like to use some funds for one or two projects, but I mainly plan to use it for a steady monthly income. I have a meeting coming up with a broker. What are the main questions I should be thinking about to get the most out of it?

A It appears that flexibility is important to you, combining the ability to withdraw a cash lump sum for specific projects, while also maintaining a steady drawdown pattern, says pensions proposition lead at Royal London, Mark Reilly.

To help your broker determine what a sustainable amount of regular income might look like, some key factors you might consider are the level of savings you have built up in your pension pot, the size and timing of any planned one-off spending that may require a cash lump sum, and also a breakdown of your projected monthly outgoings that you would like your fund to contribute to, Mr Reilly added.

One option to discuss is an Approved Retirement Fund (ARF). An ARF works by investing your money in a fund from which you can regularly withdraw an income, he says. Subject to certain tax rules, you can vary how much you take out of your fund each year.

Any amounts taken out are taxed as income and are also subject to USC and PRSI (depending on your age).

Bear in mind that since your pension fund is invested, its value may go down as well as up. An annuity is another option, which gives you a guaranteed income for the rest of your life. The income amount depends on factors such as the amount paid to buy the annuity, annuity rates, your age and health status, he added.

Q A friend of mine, who like myself is a plumber, had his tools stolen from his van a few weeks back. I told him to claim on his insurance, but he said the insurer was having none of it, claiming his tools were not covered. Is this because he didn’t have comprehensive cover? I have fully comprehensive cover, so I assume that if the same were to happen to me, I would be covered. The tools could be worth €1,000, and I could not be without them as I would lose a fortune in earnings.

A When your van policy is up for renewal next, ask your insurer or broker about the option of including your tools in the event of a theft, is the advice of Jonathan Hehir, the managing director of Insuremyvan.ie.

These policies tend to come with strict terms and conditions, so read the policy carefully and make sure it is suitable for your requirements. The premium will ultimately depend on the sums insured.

Naturally, if you add €1,000 extra worth of goods to the policy then the premium will increase, Mr Hehir said. Another option for tradesmen in your position is to ask your liability insurer if they can include tools on that policy.

The option that is the best value and represents the best cover for you will be unique to your own circumstances. Therefore, always use a registered broker for these quotes as they will be able to give you access to the greatest number of options, Mr Hehir added.

Q I was made redundant eight months ago when the restaurant I worked in closed down. But four months ago I was lucky enough to have been employed by my uncle on his fishing boat. One of the guys that was on my last boat journey mentioned something about tax back or some sort of tax relief because I now work on a boat. He didn’t know the name of it though?

A Many people who work at sea are entitled to claim either the Fisher Tax Credit or Seafarers’ Allowance. You cannot claim both.

And in your case, it sounds like you would be entitled to the fisher tax credit which is worth €1,270 per year, says Marian Ryan, consumer tax manager at Taxback.com. There are a number of qualifying conditions you must meet before you can claim. If you are eligible, you can earn up to €22,850 before paying income tax.

To qualify, you must spend at least 80 days fishing at sea. A day is considered a minimum of eight hours at sea within a 24-hour period. These eight hours can be accumulated over a number of fishing trips in a 24-hour period.

The vessel used for fishing must be licenced by an EU state and registered at the EU Community Fishing Fleets. Part-time fishers can also qualify for the credit as long as the above criteria is satisfied, Ms Ryan said.

Your personal finance questions – Pensions options, insuring your tools and the fisher tax credit

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