On 18 September 2024, the Minister of Finance outlined some key decisions taken by the Government in respect of the SFT, which are likely to affect changes to the Finance Act soon.

The SFT is a limit on the value of benefits which an individual can build up in their lifetime from Irish pension arrangements. Any excess value of benefits above the SFT is liable to a chargeable excess tax (“CET”), levied at 40%. The current €2 million limit has remained unchanged since 2014.

The key decisions taken by the Minister of Finance include:

• The SFT will increase in four annual phases of €200,000, between Jan 2026 and Jan 2029, ultimately reaching €2.8 million.
• From 2030, the limit will be increased by a growth rate based on CSO earnings data.
• The threshold for the higher rate of tax to apply to a retirement lump sum will be fixed at €500,000 in Budget 2025. The existing threshold is expressed as a proportion of the SFT, currently 25%.
• For Defined Benefit pension schemes, an independent actuarial evaluation of the age-related factors will be carried out. The independent review recommends:
  • Streamlining the factors into 5-year age bands.
  • Using different factors depending on indexation and spouses/dependents pension elements.

To find out more, our SFT Update Summary outlines the key decisions, examines some practical sample scenarios to show how impacted members might best navigate these changes and covers the other key takeaways from the independent review, which are to be considered by the government working group.

Our new Customer Solutions division has been working hard to ensure we consistently deliver excellent service to you and your people.

Our unparalleled scale of resources and extensive talent pool has allowed us to meet agreed Service Level Agreements whilst also managing spikes in volumes and complexity of requests.

At the same time, we have been investing in evolving key processes, like digital enhancements and Robotics Process Automation (RPA) to remove manual interaction so we can better serve you and your people.

We continue to invest in Service to ensure the experience remains best in class and meets all your needs.  

We are changing the name of our Sustainable Fund Series to the New World Fund Series. For example, the Sustainable Equity (ESG) Fund will become the New World Indexed All Country Equity Fund.

The Funds within the series are all Article 8 and form the cornerstone of our responsible invested range, as well as underpin our Empower multi-asset range. These Funds will continue to enable and support a better world while also prioritising the risk and return needs of members.  

There are no other changes to the Funds and the investment strategy and objectives remain the same. Fund material will be updated to reflect the new name of the Funds in due course.

The table below outlines the full list of Fund name changes:

Our recent Gender Pension Parity Research found that women in Ireland would need to work for 8 more years than men to build up the same size pension pot because of a 36% Gender Pension Gap.

A key message in the report was the need for women to be offered gender specific awareness and education supports. At Irish Life, we are delighted to let you know about a fantastic new campaign we have coming up, where we offer your female members a series of communications and female focused supports, designed to build awareness of the gap, boost financial literacy and confidence in the pensions space and encourage pro-activity.

On November 21, we will host a live Women & Pensions: Fast Track to Financial Empowerment webinar, covering key topics such as how maternity leave or working part-time can affect a member's pension savings. We'll also be sharing 5 incredibly useful Top Tips for Women to become economically empowered so they can make the most out of their hard-earned pension savings.

We will send the first communication in the series soon, alongside a host of other resources, from video to blog content, as we continue to help women understand what they can do to navigate this issue.

Every year, we review the long-term Strategic Asset Allocations (SAA) of our EMPOWER range of multi asset funds. Following this year’s review, changes have been implemented across the EMPOWER High Growth, Growth, Cautious Growth, Flexible ARF and Stability Funds.

These changes involve three key investment areas: 

1. Bonds: We enhanced diversification of the bond allocations by investing across Long Term Government Bonds, Global Aggregate Bonds (a mix of government and corporate bonds) and Global High Yield Bonds. The increase in bond allocations will be mainly offset by a reduction in the allocation to Property, as well as European Corporate Bonds.
2. Equities: In the EMPOWER High Growth Fund, we reduced the allocations to Emerging Market Equities, Low Volatility Equities and Dynamic Share to Cash Equities (risk managed equity strategy). The reductions will be offset by an increase in the allocation to Developed Market Equities.The overall allocation to equities will remain unchanged.
3. Infrastructure: We are expanding our infrastructure allocation to also include unlisted infrastructure. This new allocation will be managed by a third party, IFM Investors, a global asset manager with considerable experience and expertise in infrastructure investing.

The return and risk profile of all multi asset funds will remain the same. The majority of these changes were implemented in June.

Why did we make these changes?

Throughout 2022 and 2023, interest rates were increased significantly to combat inflation. The rise in interest rates has meant bond yields are offering much higher returns than in previous years. With yields remaining attractive this year, it provides an opportunity to further enhance diversification within the existing bond allocation. Additionally, as inflation has receded, we expect bonds to play a more traditional, diversifying role in funds going forward, one where the asset class can provide some support in times of economic weakness, as it has demonstrated historically. 

We believe that pension members invested in the highest risk, EMPOWER High Growth Fund, do not need as much equity risk control in the fund, as they are early-stage savers with long time horizons before reaching retirement, with time to recover from more short-term bouts of volatility and falls in asset prices. We’ve also modestly reduced our exposure to emerging market equities in the fund as the outlook for emerging market economies is more challenging than it has been in previous years. 

Lastly, we have expanded our infrastructure allocation as we believe the asset class holds attractive characteristics for long-term investors such as stable and predictable long-term cash flows, protection against inflation and provides diversification benefits.

Join us in supporting the runners at the Irish Life Dublin Marathon on October 27th!

At Irish Life, everything we do is working towards helping more people in Ireland to enjoy a better life today and to build better futures. One of the ways we support people is through our sponsorship of the iconic Irish Life Dublin Marathon. 

It’s a special day that sees over 20,000 people achieve an incredible goal of conquering 26 miles around Dublin City, while competing in the fourth largest Marathon in Europe.

Best of luck to those of you taking part, we’ll be supporting you every step of the way! You don’t need to be a runner to be part of a really special day, please join us at the Irish Life Mile (close to Mount Street Upper) on October 27th as we cheer the runners home. Your support can make all the difference.