Q I am due to retire next year and am thinking of buying a property with my PRSA (Personal Retirement Savings Account) pension fund, mainly to use for a rental income. I don’t have enough in my pension so I would like to top it up with a small mortgage. Is this possible with the new IORP pension rules?
A The implementation of IORP II (Institutions for Occupational Retirement Provision) has changed the landscape for pension property investment, according to Glenn Gaughran, head of business development at the Independent Trustee Company (ITC). IOPR II is a European Directive that seeks to enhance the governance and management of pension schemes.
The directive means lending in a pension is no longer allowable and no more than 50pc of the pension can be invested in unregulated assets such as property, Mr Gaughran said. However, as the changes only apply to occupational or company pension schemes, you can choose to invest in property using your PRSA without limitations if you wish.
This also applies to the likes of Buy-Out Bonds and ARFs. Property loans are generally arranged with the lender, in conjunction with your financial and mortgage advisers. Pension borrowing is always granted on a limited recourse basis, meaning that the lender cannot pursue the assets of the trustees or the pension scheme member in the case of default.
Only the property purchased can be used as a security with the maximum loan term being 15 years, Mr Gaughran said. You mention that you are due to retire next year so it is important to be aware that all loans must be repaid in full before retirement. He recommends you talk through any investment decisions with your financial adviser.
Buying property with your pension fund can be an attractive investment option due to the favourable income tax rules on rental income and the exemption from capital gains tax on profit when the property is eventually sold.
Q I recently had a minor day-case procedure to remove a skin tag. The consultant charged me a consultation fee and I also completed a claim form for my health insurance. Is this correct and will this be fully covered?
A The out-patient charge is the standard consultation fee, according to Dermot Goode of TotalHealthCover.ie. So you were charged correctly for the consultation, he said. But many minor surgeries are covered by your insurer as they are listed as approved day-case procedures by the insurers. These are treated like a hospital or in-patient claim.
This means you complete the claim form which is sent to the insurer and the insurer discharges the benefit directly to the hospital or consultant involved. Most plans cover these day-case procedures, subject to a small excess per claim, Mr Goode said.
If you hold a good corporate plan, you should be able to reclaim 50pc to 75pc of the out-patient consultation fee with no excess to pay first.
You can normally ‘scan and send’ this to your insurer for an immediate refund and any portion not covered can be included in your end-of-year tax claim. If you do not have a good corporate plan with this out-patient benefit included, make sure you complete a full review of your cover prior to the next renewal date, he said.
Q I have been with the same car insurer for the last five years. My friends keep telling me that their premiums have gone down since they switched, but mine hasn’t. I know I should probably change, but I still consider myself to be on a fairly good deal. Is it worth switching?
A The message here in unequivocal – shopping around is the only way to ensure you are getting the best deal on motor insurance, said Jonathan Hehir, the managing director of Insuremycars.ie.
You might have found the cheapest rate when you signed up with your current provider five years ago, but it is very unlikely that company represents the best value now for your policy needs, he said. If any life circumstances that might impact your car insurance rates have changed during that time there is a better chance of finding a lower cost rate with another provider.
For example, you might have bought a new car, put a named driver on your policy, or moved house. Contact a reputable broker, as they will have the facility to scour the market for you every year and avail of offers and discounts among providers that might not ordinarily be available directly to customers.