Question of Money - May 6, 2012
Posted by Jill Kerby on May 06 2012 @ 09:00
Follow Aussie rules to move fund down under
JK writes from Australia: I have moved permanently to Australia. My pension fund is with Mercer in Ireland. My last estimate was worth approx €40,000. I have been paying into an Australian fund for two years.
How should I approach Mercer regarding the transfer of my Irish pension fund to my Australian fund? Would I have to pay tax/penalties if I take this course?
As a large pension administrator Mercer handles regular queries from former Irish pension fund members who have emigrated and want to know the best way to proceed with their accumulated pension fund.
The Mercer official I spoke to told me that the successful transfer of a fund to another country usually depends on how similar or different are the pension fund rules of the new employer and new country. Irish and Australian pension funds rules regarding pre-retirement access to funds, are quite different, said the official.
He suggested that you contact the Mercer ‘JustAsk’ telephone helpline at 1890 275 275 or email it to JustASK@mercer.com&subject=Query for JustASK where you will be put in touch with your employment pension scheme administrator. This person will provide you with a short checklist of questions, including your new company’s equivalent of our Revenue registration number that will help determine whether the fund transfer is possible or not.
Any costs involved in a successful transfer, said the official, will be paid by your former employer here in Ireland and not by you.
AH writes from Dublin: My husband and I took out a mortgage in 2007. I’m not sure if we were fixed or variable back then but in 2010 we fixed it for two years as my husband became unemployed. A few weeks ago we received a letter from Bank of Ireland to say we were shortly coming out of the fixed rate and they offered us a tracker mortgage, which we obviously have accepted.
My query is, are we part of the couple of thousand customers that BOI didn’t offer a tracker to when they should have, and would we be due back any money which we might have over-paid when we fixed again in 2010?
Karl Deeter of Irish Mortgage Brokers & Advisors suggests that the first thing you do is check your original mortgage contract and letters of offer from the bank to determine what kind of mortgage you took out in 2007. You can do this by checking the mortgage contract and letters of offer from the bank.
“For your reader to be offered a tracker now, as her 2010 fixed loan expires, suggests to me that she and her husband were probably tracker mortgage holders back in 2007 but ended up opting, for some reason, for a three year fixed rate. In 2010 they decided to go onto another fixed rate because of the husband’s employment circumstances.” Bank of Ireland are not offering trackers anymore, he said, unless they are obliged to under an existing mortgage contract.
Just over 2000 tracker loan customers were compensated by the bank last year, at the instruction of the Central Bank after it was found that they were not permitted to revert to their tracker mortgages after going onto fixed rates for a period and were put onto more expensive variable rate interest repayments instead. But before you – or even a mediator like the Financial Services Ombudsman - can determine if you too overpaid your mortgage before 2010 you need to be absolutely clear about the repayment terms of the original 2007 mortgage – was it a fixed, variable or even a tracker loan?
If you can’t find all the mortgage correspondence from the bank for 2007 and 2010 in which any reference to a tracker rate will be noted, says Deeter, you can request copies from the bank compliance officer under Section 4 of the Data Protection Acts 2003 and 2008.
Once that’s done, you should be in a better position to decide whether you have a case to pursue with the bank or the Financial Services Ombudsman.
CO’S writes from Dublin: My wife and I are both working as teachers. Next year she will be job sharing. I earn €43,000 and she earns €53,000. Will I be able to transfer any of her allowances to me? We both are taxed separately as a married couple. What can we do to reduce my tax and can I benefit from any of her allowances? She will be earning around €27k or half of her present income.
Since you are separately assessed for income tax, you each have a standard rate cut off point of €32,800 in 2012. This means that you both pay standard rate tax of 20% on your first €32,800 and 41% on the balance of your individual earnings.
From next year your wife will only earn €27,000, therefore you should opt for joint assessment. As a couple, your 20%, standard rate income tax cut-off point will be €65,600, (a maximum €41,800 for one spouse, provided the lower earning spouse has income of at least €23,000.) You can then split the €65,600 as follows: €27,000 to your wife and €38,600 to yourself. The balance of earnings will then be taxed at the marginal tax rate of 41%.
As a separately assessed married couple you cannot transfer allowances between each other this year, but you will be entitled to a refund at the end of the year if you pay more tax under separate assessment than you would have paid under joint assessment. This is another good reason to be jointly assessed next year.