Executive Retirement Planning

What is it?

• Establishing a personal, bespoke benefits plan or a defined ORSO registered scheme for an employee.
• Employers make annual contributions to the scheme. These are tax deductible to the employer if they are 15% or less of the employee's total salary.
• Employers make special contribution for employees' past services. In the case of a defined benefits plan, employers contribute to an underfunded scheme. These contributions are deductible over five years.
• Trustee of scheme invests contributions in accordance with employees' directive.
• The employee should not seek to withdraw the scheme funds before retirement and/or the termination of his/her services.

Potential tax advantages:

• Contributions are tax deductible for both employers and employees.
• Income/gains earned through the scheme is never eligible for taxation.
• The tax risk should in most cases be low, even with full disclosure to IRD.
• Income gained is not subject to overseas taxes, which can be a benefit to anyone retiring overseas.
• Gained income which remains after the passing of an employee is not subject to Estate Duty.

PwC can provide services including:

• Financial modelling to illustrate both the corporate and individual tax implications under various scenarios.
• Provision of tailored tax advice.
• Review and amend the existing employment contracts when necessary.
• Advising in the determination of the level of annual and special contributions.
• Advising in the determination of the vesting, investment, and other pension plan rules.
• Introducing and liaising with other service providers who might be required, e.g. trustees, fund managers, actuaries, and/or lawyers.