Jill Kerby

PP writes from Dublin: Some time ago you gave the address of who would supply information about converting pension funds into PRSAs, the above, but I have forgotten it.   I contacted Irish Life re information on buying an annuity, and they suggested I should contact an independent broker.    

A good pensions advisor should be able to explain the merits of transferring a qualifying occupational, defined contribution pension fund and/or AVC into a PRSA if you are over 50 and especially if you have been made redundant.  This is because the pension income produced from the pension annuity you would be obliged to purchase if you encashed your pension could reduce any means-tested Jobseeker’s Benefit you might be entitled to if you have not secured work after your 12 months of Jobseeker’s Allowance runs out.  There is no cost involved in transferring a pension fund to a standard PRSA, but there is a charge (typically 1% of the fund) in arranging for the required actuarial certificate. Pension consultant Michael Leahy, the former CEO of Standard Life (michael_leahy@globalpensionoptions.com ) is the actuary whose company, Global Pension Options provides this service to individuals and to the pension providers who accept such transfers. 

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NP writes from Dublin: I have a question relating to the purchase of a Section 23 apartment. My late brother purchased one in 2006 for €260,000. He died in 2007 having used some of the allowances against other rental income. As he had not held the apartment for 10 years a claw back was paid to Revenue. I am thinking about buying the apartment for €115,000 in line with falling property prices but am unable to get a satisfactory answer regarding the amount of rental relief I would be entitled to, offset against other rental income. My accountant says the rental relief should be the new price, €115,000. Revenue say it is based on a formula which, is the property cost multiplied by the development cost plus the site cost. I don’t know yet what the site and the development cost are. If Revenue are correct it would hardly be worthwhile to make the purchase as the rental relief would be very small, €40,000 or less.  Revenue’s answer would seem unfair as the site cost and the development cost would be much less today than they were in 2006 when the property was first purchased. Like my brother, I intend to offset the rental relief against other rental income. 

According to tax advisor Sandra Gannon of TAB Taxation Services in Dublin, the Revenue should allow you the full amount of tax relief that was available to your brother when he bought the property despite the fact that your purchase price would produce a much smaller tax relief amount.  The Revenue’s website, www.revenue.ie  allows you to download a booklet, A Guide to Section 23 relief – Rented Residential Relief in a Tax Incentive Area, which outlines how to calculate your tax relief.  It gives an example – see Section 6.2, Example 2 -  of how the original Section 23 property is sold for a lower price to a new buyer and how the new buyer, because their tax relief works out at lower amount because the purchase price is lower than the original purchase price, is still entitled to claim the higher relief that applied to the original buyer.   Either you or your accountant should be able to confirm the amount of tax relief you will be entitled to from this example. 

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LL writes from Dublin: In regard to the bank guarantee, is Ulster Bank fully covered by the Irish government in their branches in the republic? 

I became unemployed in May. My mortgage is quite new. I applied for mortgage interest supplement to assist with the interest portion of my mortgage and Ulster Bank had to send a copy of my mortgage application to the community welfare officer. The manager in my local branch sent this request through the internal bank post, but it has been delayed. Without the mortgage supplement it is difficult for me to repay my mortgage and I feel that my only option is to cease paying the mortgage payment, until I receive the requested documents. I know this appears to put me in the wrong but I can't see any other option. I would be grateful for your advice.

First, Ulster Bank’s deposits are covered by the £50,000 bank deposit scheme operated by the Financial Services Authority in the UK. It does not come under the Irish government 100% guarantee scheme. As for the problem you are having in getting the bank to release the documents that you local community welfare officer needs before he can assess whether you are entitled to mortgage interest supplement, I suggest you contact the dedicated MoneySense officer in your branch about your difficulties, if you haven’t already done so. MoneySense is a new personal finance guidance programme that UlsterBank introduced last May for its customers to use on-line, in print and face-to-face in all their 227 branches. Dealing with unexpected situations like losing a job, divorce or illness is one of the specific functions of the new service in order that customers don’t arbitrarily stop making mortgage or other loan payments. According to Richard Donnan, Managing Director of Personal Banking at Ulster Bank, “In recent months, reports of job losses and the resulting financial pressure on customers has intensified. We want to give people the practical support they may need at this time to help them take control of their finances.”  Let me know how you get on.