tag:blogger.com,1999:blog-25092774887681721252023-11-16T15:10:15.721+00:00Liam Ferguson's blogFinancial short stories from Ferguson & Associates and FergA.comLiam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.comBlogger97125tag:blogger.com,1999:blog-2509277488768172125.post-13801419468884136882013-04-17T16:33:00.002+01:002013-04-17T16:33:43.385+01:00Aviva's predictions about Irish commercial property<div class="separator" style="clear: both; text-align: center;">
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I participated in an Aviva webinar earlier this week about "The Case for Irish Commercial Real Estate" as an investment. One of the quotable quotes from the end was <br />
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"We believe the prospects for the Irish real estate market for the five-year period from the start of 2013 look attractive; indeed we are forecasting an overall annualised total return of over 12% pa, supported by robust income returns and capital growth. In short, although risks remain – including economic uncertainty in the euro zone, ongoing weakness in the banking sector and a lack of clarity from NAMA – we believe that now is an opportune time to reappraise the merits of Irish commercial real estate as part of a diversified investment portfolio."</blockquote>
With respect to the clever people at Aviva, I'm very sceptical about forecasts of growth rates for an asset class too far into the future. Although such forecasts are presumably based on sound scientific research and methodology, there are far too many utterly unpredictable variables than affect the movements of any real asset class, property included, to enable anyone to come up with a reliable figure of "over 12% per annum". <br />
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There's also a risk that, taken out of context, people could base important financial decisions around an expectation of "over 12% growth" per year for the next 5 years. In fairness to Aviva, the webinar offering this prediction was for investment professionals only, so I'd hope that none of the participants would give their clients this expectation. <br />
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On the positive side, I have a certain level of admiration for an investment analyst who is willing to come off the fence and make such a specific growth forecast, in this era when electronic diaries make it so easy to set up a reminder for 5 years' time to check how the forecast turned out. <br />
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Despite all my misgivings, I do agree with Aviva on the important point - that the fundamentals for Irish Commercial Property would suggest that 2013 is indeed a good time to consider investing in this asset class again. I'm just too long in the tooth to start making predictions about future growth rates. Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-42586156979992648312013-03-09T13:53:00.001+00:002013-03-09T13:53:43.670+00:00Enda's million-euro pension in just two yearsI generally steer clear of commenting on politicians on the grounds that I don't believe I could do better myself, so therefore I won't criticise someone else's attempts. I don't have any connection to any political party either. But I couldn't resist crunching the numbers from <a href="http://www.thejournal.ie/ministerial-pensions-824150-Mar2013/" target="_blank">this article</a> from <a href="http://www.thejournal.ie/" target="_blank">The Journal.ie</a> published online today.<br />
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After two years in Government, ministers receive an entitlement to a pension. The current Government is two years in office today, so that triggers this entitlement. <br />
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According to the article, Enda Kenny's entitlement is a pension of €21,466 per year if he was to retire today. Let's be clear - that €21,466 is an entitlement that has accrued solely from his two years in Government. It's in addition to any other pensions he has accrued over the rest of his career. <br />
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For those of you who don't know - Public Service (including Government) pensions are not pre-funded - they're paid out of current Exchequer resources. In other words, the taxes that you and I pay today go towards paying the pensions of retired Public Servants. This is a different system to the Private Sector, where pension contributions are used over a person's career to build up a fund from which their pension is paid when they retire. <br />
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But how much would a Private Sector individual need to put into a pension fund in order to provide a pension of €21,466 per year for life? Mr Kenny is 61 years old and his wife Fionnuala is 6 years younger. Public service pensions provide for increases in payment and a widow's pension of 50% to be paid for the rest of the spouse's life in the event that the pensioner dies before their spouse. <br />
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A Private Sector individual would need to accumulate a fund of over €989,000 in oder to provide them with a pension of €21,466 per year for life on the same terms, using current annuity rates. <br />
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Let me repeat - that entitlement has been accrued solely <em>in the last two years</em>. Mr Kenny's total pension when he retires will be a multiple of this, adding in the pensions from the rest of his career. <br />
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Not bad for two years' work!<br />
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Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com2tag:blogger.com,1999:blog-2509277488768172125.post-10058447475365349622012-12-03T18:59:00.001+00:002012-12-03T19:00:12.396+00:00Zurich unbundles insurance from pensions - at last!<div class="separator" style="border-bottom: medium none; border-left: medium none; border-right: medium none; border-top: medium none; clear: both; text-align: center;">
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I'm pleased to see that from 14th December 2012, Zurich Life are ceasing to offer life insurance, specified serious illness cover, waiver of premium and income protection benefits bundled into the one pension policy. If you want these benefits, you'll have to buy them in a separate product. </div>
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Why is this a good thing? Because bundling of insurance products into investment or pension policies is not at all transparent in terms of cost. You pay one premium (usually per month) into the pension policy and with this premium, you buy units in your chosen fund(s). If there are insurance benefits bundled with the policy, each month units are cancelled to pay for the insurances. </div>
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The sting in the tail is that the cost of the insurances is not fixed - the numbers of units cancelled can and will get bigger as you get older. Worse, you're not notified as the cost of the insurance is increasing. So if you continue paying the same pension premium year in, year out, a smaller and smaller percentage of the premium is actually going towards your eventual pension. </div>
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Credit to Zurich Life for finally getting rid of this opaque practice. </div>
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A far better idea is to have a separate policy for your insurances which is a fixed cost so at all times you know what your insurances are costing and how much is going into your pension and never the twain shall meet. </div>
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Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-37283493144660765912012-10-05T12:17:00.000+01:002012-10-05T12:17:22.982+01:00Featured Client / Guest Blog Post - Jane Hogan<div class="separator" style="clear: both; text-align: center;">
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<st1:personname w:st="on"><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">Jane Hogan</span></st1:personname><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;"> is an international award winning Business Coach and co-owner of The Business Practice.<span style="mso-spacerun: yes;"> </span>She specialises in business growth and personal development for Business Owners and Executive Teams. Jane is passionate about helping people and businesses focus on what’s important, remove obstacles to growth and realise their potential.</span></div>
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<span style="font-family: 'Arial','sans-serif';"><span style="color: blue;">Getting more bang for your Marketing buck</span></span></h2>
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<span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">Many of the business owners I speak to complain that Marketing is a waste of time and money as they don’t get any results from it.<span style="mso-spacerun: yes;"> </span>Others just don’t bother doing any at all, either because they have had bad results in the past or because they are afraid to invest in something that may or may not work.<o:p></o:p></span></div>
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<span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">Marketing in any business should be an investment rather than an expense. i.e. for every euro you spend on Marketing you should get more euro back in return.<span style="mso-spacerun: yes;"> </span>This gives you an unlimited Marketing budget, because any money you invest gains you more.<span style="mso-spacerun: yes;"> </span>Marketing is only an expense when you spend money on strategies which don’t get you any results.<o:p></o:p></span></div>
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<span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">So how can you improve your chances of getting good results from Marketing?<span style="mso-spacerun: yes;"> </span>The key to this is to be targeted in your Marketing.<span style="mso-spacerun: yes;"> </span>By answering these 5 questions in order, you will greatly increase your chance of getting a good return on your Marketing investment.<o:p></o:p></span></div>
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<li class="MsoNormal" style="margin: 6pt 0cm 0pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">Who are your target markets?</span></b><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>Define all of your different target markets as separate groups as they all have different reasons for being interested in your product or service.<span style="mso-spacerun: yes;"> </span>E.g. older people, couples with young children, accountants, rugby players.<span style="mso-spacerun: yes;"> </span>The more specific you are the better…and it doesn’t matter if you have lots of different target groups.<o:p></o:p></span></li>
<li class="MsoNormal" style="margin: 6pt 0cm 0pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">Where will you find them in highest concentration?<span style="mso-spacerun: yes;"> </span></span></b><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">Think about where each of target groups hang out in large numbers.<span style="mso-spacerun: yes;"> </span>E.g. couples with young children will be found in schools, crèches, sports clubs etc.<o:p></o:p></span></li>
<li class="MsoNormal" style="margin: 6pt 0cm 0pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">What do they want to buy and what is your offer?</span></b><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>If you sell holidays, different people will want to buy different things.<span style="mso-spacerun: yes;"> </span>A couple with young children will most likely want some place with a kids club and children’s menus in the restaurant.<span style="mso-spacerun: yes;"> </span>An older couple might want a quiet resort where they can play golf and not be disturbed by a lot of noisy children.<span style="mso-spacerun: yes;"> </span>You need to be offering them different products.<o:p></o:p></span></li>
<li class="MsoNormal" style="margin: 6pt 0cm 0pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">Why do they want to buy it?<span style="mso-spacerun: yes;"> </span>What are the benefits to them?</span></b><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>Your customers don’t care about the features or technical specification of your product or service.<span style="mso-spacerun: yes;"> </span>They care about what it will do for them and how they will benefit from it.<span style="mso-spacerun: yes;"> </span>If you sell cars, they don’t care about the technical details of how the brakes work, but they care very much about how quickly they will be able to stop if a child runs out in front of them.<o:p></o:p></span></li>
<li class="MsoNormal" style="margin: 6pt 0cm 0pt; mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;"><b style="mso-bidi-font-weight: normal;"><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">How will you communicate your offer to them?</span></b><span style="font-family: 'Arial','sans-serif'; font-size: 10pt;"><span style="mso-spacerun: yes;"> </span>Now that you know who your target audiences are and where they congregate, you can think about the most appropriate way to get in contact with them.<span style="mso-spacerun: yes;"> </span>If you have a very tightly defined target market, there is no point in spending a lot of money advertising in a national newspaper or radio station, because the majority of their audience aren’t looking for your product or service. For couples with young children, you might choose to advertise on websites which provide information for families or even put posters in schools, clubs etc.<span style="mso-spacerun: yes;"> </span>For older people, you might choose to advertise in a magazine aimed at the over 50s.<span style="mso-spacerun: yes;"> </span>Wherever you choose to do your marketing to your target group, you now need to ensure that your message focuses on what they want to buy and especially on the benefits to them of having your product or service.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></li>
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<span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">If you would like to have a complimentary business coaching session to find out how you could make your Marketing investment go further, please contact me at <a href="mailto:janehogan@thebusinesspractice.ie"><span style="color: blue;">janehogan@thebusinesspractice.ie</span></a> or on 087-6479521.<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div>
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<span style="font-family: 'Arial','sans-serif'; font-size: 10pt;">Check out my linked in profile at <a href="http://www.linkedin.com/pub/jane-hogan/9/6a/453"><span style="color: blue;">http://www.linkedin.com/pub/jane-hogan/9/6a/453</span></a><o:p></o:p></span></div>
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Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-64162796882180337022012-02-06T17:00:00.003+00:002012-02-06T17:29:45.752+00:00Are You Due a PRSI Refund?There was a fair bit of publicity recently surrounding a news story that the State <a href="http://www.rte.ie/news/2012/0130/prsi.html">has refunded €10 million to taxpayers who were overcharged in 2010</a>. We've had several calls about this. <br /><br />Just to be clear - this relates to the Health Levy. If your overall income in 2010 was less than €26,000 you were exempt from the Health Levy. If you earned more than €500 in one week in a PAYE employment, the Health Levy would have been deducted for that week. <br /><br />So anyone who earned more than €500 in a week during 2010 AND earned a total of less than €26,000 for the year should reclaim their Health Levy.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-14130509082061005442012-01-25T16:44:00.004+00:002012-01-25T16:58:10.985+00:00Two Months' Cash Back on Life Insurance & Income Protection<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFq6705cEi70QGE37zktwc8FM_ocFGyxeF9VO1Cz3hK9bcCjUk4Zem2__bghaZV8Mjpo_zRrmpS_t3ZYxAgGJ-jPeQqSYfrXnC8LzJ1THPaEiW3DKu-xerLeUgnWcmaBQjzd79QEeBAww/s1600/image002.png"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 105px; DISPLAY: block; HEIGHT: 76px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5701613156607012722" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhFq6705cEi70QGE37zktwc8FM_ocFGyxeF9VO1Cz3hK9bcCjUk4Zem2__bghaZV8Mjpo_zRrmpS_t3ZYxAgGJ-jPeQqSYfrXnC8LzJ1THPaEiW3DKu-xerLeUgnWcmaBQjzd79QEeBAww/s320/image002.png" /></a><br /><br /><div>If Life Insurance or Income Protection has been something you've been planning to get around to for a while, here's an offer that might motivate you to get it sorted once and for all.</div><br /><div></div><br /><div>Anyone who applies for a new life insurance policy (including Mortgage Protection life insurance) or an Income Protection policy before the end of February 2012 will receive a refund of their first two months' premiums. The policy must be issued before 27th April 2012, all premiums must be paid on time and the refund will be paid within 60 working days of paying the second month's premium. Maximum cash-back is €1,000.00.</div><br /><div></div><br /><div>As always, part of our Protection service includes a comprehensive Needs Analysis. We don't recommend that you take out a protection policy with a randomly-selected level of cover. Instead we calculate and show you the correct amount of cover for your needs. </div><br /><div></div><br /><div>For a no-obligation free quote, just contact us at <a href="mailto:info@ferga.com">info@ferga.com</a></div><br /><div></div><br /><br /><br /><div></div>Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com5tag:blogger.com,1999:blog-2509277488768172125.post-79954770384849499802011-10-03T13:49:00.005+01:002011-10-03T14:34:58.437+01:00Free €10,000 life cover offer<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkJ34sR5bYpQ65151Q-9ph0xr5vuHsaYSDdqJpmuu4e33w75Ha77tjNHDC8SYDlGFB2NBnXC2HGZ9L06hfP06rifXCnqSWi1JEwM0_9JqK3l7EvCBxorFJcLBCDFH6tARfFUDcAKFLTUo/s1600/Free+life+cover+offer.jpg"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 461px; DISPLAY: block; HEIGHT: 100px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5659247586477119634" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgkJ34sR5bYpQ65151Q-9ph0xr5vuHsaYSDdqJpmuu4e33w75Ha77tjNHDC8SYDlGFB2NBnXC2HGZ9L06hfP06rifXCnqSWi1JEwM0_9JqK3l7EvCBxorFJcLBCDFH6tARfFUDcAKFLTUo/s320/Free+life+cover+offer.jpg" /></a><br />A recent survey by Irish Life discovered that 2 out of 3 people who have life cover only have enough to protect their mortgage and have none to protect their children or dependants in the event of their death.<br /><br />As a way of raising awareness, Irish Life are giving away €10,000 of free life cover for year to the first 20,000 people who sign up. There's no catch - the cover is free and anyone can apply provided that they're under 55 and have at least one child aged 13 and under.<br /><br />Click <a href="http://bit.ly/o7UYZ7">here</a> to get more information or apply. Or if you know people who might be interested, send them this link.<br /><br />If you have any queries just drop me an e-mail to <a href="mailto:liam@ferga.com">liam@ferga.com</a>Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-31205875026545001452011-07-04T15:24:00.007+01:002011-07-04T15:49:49.160+01:00An Irish institution bites the dust<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHX8Y3W6J_JBJrwkqguryOsnJMZ5AXYOV2-o1fwz1WLkZ59yJVFmJB9nRAfEMxm2rr1Ha-WyM-FN6y0_k9BLPRIGfQ27B3s_A7-T4Kp7bKFafd9R_eja-mBnCixjlWY2Rmqy0t79q2BlY/s1600/EBS+logo.gif"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 292px; height: 60px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHX8Y3W6J_JBJrwkqguryOsnJMZ5AXYOV2-o1fwz1WLkZ59yJVFmJB9nRAfEMxm2rr1Ha-WyM-FN6y0_k9BLPRIGfQ27B3s_A7-T4Kp7bKFafd9R_eja-mBnCixjlWY2Rmqy0t79q2BlY/s320/EBS+logo.gif" border="0" alt=""id="BLOGGER_PHOTO_ID_5625508037194971874" /></a><br />I couldn't help feeling a little bit sentimental when I got a notification on Friday last that the EBS Building Society has been replaced by EBS Limited with immediate effect. While it may seem like just a name change and has no impact on customers' accounts, it's actually more than that. It's the demise of the old Educational Building Society, a mutual society founded in 1935 to help teachers and civil servants to buy homes. In its place is EBS Limited, a limited company which will soon become a part of AIB.<br /><br />It is a shame to see an old mutual society disappear like this, even if the name will continue. Mutuals are owned by their members and would traditionally offer better value for money than private or public companies, which are run for the benefit of their shareholders. I can remember that EBS had a reputation for consistently offering competitive interest rates to their members before the property mania gripped us all. <br /><br />Admittedly, EBS did lose its way somewhat in recent years as it tried to compete with the other mortgage lenders. It entered the commercial lending arena just as the wheels were beginning to come off, a move from which it never really recovered. <br /><br />Shame how some bad decisions over a relatively short period of time can bring down a reputable society with a history spanning over 75 years.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-10855701835473307592011-06-11T11:04:00.007+01:002011-06-11T11:26:49.065+01:00More reasons to incorporate your business<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgC6e7fSQDakirE7whKpPc_PjB7X76LzR9DG9qViDby8YI1MLycKPtyMFBY_emGqirk_k1KAc086aG2rzsIDKlBNsjuaQmc22dsJcl4GaxTvbrZ5z6pxptxeatFqCcTJyCaaVO7MbLd_D0/s1600/Choices.jpg"><img style="MARGIN: 0px 10px 10px 0px; WIDTH: 273px; FLOAT: left; HEIGHT: 163px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5616905239977743650" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgC6e7fSQDakirE7whKpPc_PjB7X76LzR9DG9qViDby8YI1MLycKPtyMFBY_emGqirk_k1KAc086aG2rzsIDKlBNsjuaQmc22dsJcl4GaxTvbrZ5z6pxptxeatFqCcTJyCaaVO7MbLd_D0/s320/Choices.jpg" /></a><br /><br /><br /><div>If you're a sole trader, or thinking about starting up a business, new legislation should make it easier for you to incorporate the business as a limited company. For example, you'll be able to have just one director, just one document in the company constitution and you'll be able to have an AGM by correspondence. See <a href="http://www.irishtimes.com/newspaper/breaking/2011/0530/breaking45.html?sms_ss=linkedin&at_xt=4de3b019f332d773%2C0">this article</a>. </div><br /><br /><div></div><br /><br /><div>At present, there are benefits to being a company director as distinct from a sole trader, when it comes to making pension provision. Here's a brief summary: - </div><br /><br /><div><strong>Sole Traders</strong></div><br /><ul><br /><li>Pension contributions limited to a fixed percentage of Net Relevant Earnings, dependant on age.</li><br /><br /><li>Earnings cap of €115,000.</li><br /><br /><li>No PRSI or USC relief.</li><br /><br /><li>Earliest retirement age (except in ill-health) is 60.</li></ul><br /><br /><p><strong>Company Directors</strong></p><br /><ul><br /><li>Companies can write off significant pension contributions against Corporation Tax, up to generous Maximum Funding limits. </li><br /><br /><li>Funding not restricted by the earnings cap.</li><br /><br /><li>Company contributions offer effective relief against tax, PRSI and the USC.</li><br /><br /><li>Early retirement permitted from age 50, once director severs ties with company and disposes of shares.</li></ul><br /><br /><p><a href="http://www.freedigitalphotos.net/images/view_photog.php?photogid=1152">Image: jscreationzs / FreeDigitalPhotos.net</a></p><br /><br /><p></p>Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-39435949584521268612011-05-23T19:36:00.005+01:002011-05-23T19:59:34.691+01:00No PRSI on Employer PRSA<div align="center"><br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFVo-8Rn0C3GCsQ7HhncFObNAaywn0nkW1J2os1AWSb3JSYo6AOGd6HAILNeJJNDwPiQ3jhBzRcvD8e92D2hxgUcre9jPC5pfOgdyXvrgT4IN1rXGivvmNE0ggYY2eFc6dQFXAZwnRh70/s1600/Coins.jpg"><img style="MARGIN: 0px 10px 10px 0px; WIDTH: 167px; FLOAT: left; HEIGHT: 116px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5609987522575476178" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFVo-8Rn0C3GCsQ7HhncFObNAaywn0nkW1J2os1AWSb3JSYo6AOGd6HAILNeJJNDwPiQ3jhBzRcvD8e92D2hxgUcre9jPC5pfOgdyXvrgT4IN1rXGivvmNE0ggYY2eFc6dQFXAZwnRh70/s320/Coins.jpg" /></a><br /></div>I know - snappy title. The Department of Social Protection have confirmed that contributions by an employer to a PRSA do not generate a PRSI liability for the employee. Such contributions do, however, generate a USC liability.<br /><br /><br />In clarifying this, the powers that be have gone less than half-way to rectifying a known anomaly between PRSAs and Occupational Pension Schemes. Employer contributions to Occupational Pension Schemes are not a Benefit in Kind and therefore do not generate a liability for the employee in respect of tax, PRSI or the USC. Employer contributions to a PRSA are a Benefit in Kind and, while tax relief offsets the tax and now the PRSI liability has been removed, the liability to the USC remains.<br /><br />When PRSAs were launched, less than eight years ago, they were designed to be low-cost, transparent, portable pension savings vehicles that would encourage more people to save for their retirement. Why the Government is now discriminating against them in favour of the older type Occupational Pension Schemes is beyond me.<br /><br /><br /><br /><p><a href="http://www.freedigitalphotos.net/images/view_photog.php?photogid=982">Image: graur codrin / FreeDigitalPhotos.net</a></p>Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-67814699653007178312011-05-21T15:23:00.003+01:002011-05-21T15:37:47.123+01:00Surprise - Mortgage Lending is Down<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOCXupiiBhsdxlxmA-38cWeUmR9kqblVnQfcgSRNuQUxtrTUZ7uJS6nCE3AqEGfyDMU71LU0zc6sqk6RU-RrDaETZG7vpTZLdsGvo88SjDXwgGGgkHUVG5V7wB518DBz3l85ZOaIZhyCM/s1600/ruin-atrium.jpg"><img style="MARGIN: 0px 10px 10px 0px; WIDTH: 320px; FLOAT: left; HEIGHT: 240px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5609178320361849442" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOCXupiiBhsdxlxmA-38cWeUmR9kqblVnQfcgSRNuQUxtrTUZ7uJS6nCE3AqEGfyDMU71LU0zc6sqk6RU-RrDaETZG7vpTZLdsGvo88SjDXwgGGgkHUVG5V7wB518DBz3l85ZOaIZhyCM/s320/ruin-atrium.jpg" /></a><br /><br /><div>This week, the Irish Bankers Federation published their Mortgage Market Profile. Unsuprisingly, the Irish mortgage market continues to contract. In my opinion there are two main reasons for this - (1) people are still deferring property-buying decisions due to fear / uncertainty / possibility of further price drops and (2) lending criteria has tightened so much that it's a lot harder to get approved for a mortgage than it was previously. </div><br /><br /><br /><div></div><br /><br /><br /><div>Here's an extract from the Press Release... </div><br /><br /><br /><div><br />• 3,259 new mortgages issued in Q1 2011 to a value of €577 million<br />• Home purchasers continue to dominate the market<br /><br /><br />The IBF/PwC Mortgage Market Profile published today shows that 3,259 new mortgages to the value of €577 million were issued during the first quarter of 2011.<br /><br />The volume of new lending is down 42% compared to the previous quarter and is down 53.1% on the previous year. While the seasonal pattern of mortgage lending typically results in a lower level of lending in the first three months of the year compared to other quarters, this more pronounced reduction in activity reflects the broader macroeconomic environment.<br /><br />However, the key home purchaser segments of the market, First Time Buyers and Mover Purchasers, continue to dominate this smaller market. Together they now account for over 77% of the market by value and 67% by volume. In effect, more than three-quarters of all mortgage credit issued now goes to the home purchasing segments of the market.<br /><br />Lenders generally continue to report subdued underlying demand for new mortgage finance. This has been influenced by uncertainty around macroeconomic developments, property price trends and future interest rate movements. At the same time, lenders continue to point to the need for prudent lending with the all-important focus on the borrower’s employment situation and capacity to repay. </div>Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-5672686465647670432011-04-26T16:26:00.008+01:002011-04-26T16:46:06.238+01:00Personal Fund Thresholds - Revenue deadline looming...<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi68qi-TH6ZC-n4eVUT3tJ7Y3jkbmeB6-UOsaL-ove9LbSolJNIPXjz6gNVZMDkokRqDsWWPQq29Eb9BqbB7BgAx9jxzThOCQPJ07wYAvj7aZsyM8QSGvH6yVLLYd2PMygsMS4SLfTiGSo/s1600/Speeding+road.jpg"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 152px; DISPLAY: block; HEIGHT: 150px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5599916575620921346" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi68qi-TH6ZC-n4eVUT3tJ7Y3jkbmeB6-UOsaL-ove9LbSolJNIPXjz6gNVZMDkokRqDsWWPQq29Eb9BqbB7BgAx9jxzThOCQPJ07wYAvj7aZsyM8QSGvH6yVLLYd2PMygsMS4SLfTiGSo/s320/Speeding+road.jpg" /></a><br /><br /><br /><br /><div>In accordance with Section 787P(2), Taxes Consolidation Act 1997, anyone with pension benefits with a capital value of over €2.3 million at 7/12/2010 has until 7/6/2011 to apply for a Personal Fund Threshold (PFT) Certificate. Anyone who misses this deadline faces substantial additional taxation when they retire. Bearing in mind that an application for a PFT Certificate involves gathering details of all pension arrangements, often from a variety of sources, anyone who needs a PFT Certificate should be taking action now.</div><br /><br />Worryingly, in <a href="http://www.irishtimes.com/newspaper/finance/2011/0409/1224294305357.html">this Irish Times piece</a>, Dominic Coyle tells us that by April 8th, only 144 enquiries had been received by Revenue on this topic, out of an estimated 6,000 affected people.<br /><br /><strong>Who does this affect?</strong><br /><br /><br /><div>While the figure of €2.3 million might seem enormous, don't forget that this is the capital value of a pension fund. So you don't have to be a multi-millionaire to fall into this category. Here's a few examples: - </div><br /><br /><br /><br /><br /><div>• Anyone in a Defined Benefit pension scheme with an expectation of a pension of €115,000 per year or more, before lump sum entitlements. </div><br /><br /><br /><br /><div><br />• Any Public Servants with an expectation of a pension of €100,000 per year or more.</div><br /><br /><br /><br /><div><br />• Anyone in either of the above categories with a lower pension entitlement but with additional pension funds from other sources, e.g. AVCs, RACs, pensions from previous employments etc. </div><br /><br /><br /><br /><div><br />• Anyone with Defined Contribution pension funds totalling more than €2.3 million at 7/12/2010.<br /><br /><strong>What happens if the June deadline is missed?</strong></div><br /><br /><br /><div>After 7/6/2011, anyone who retires with pension benefits with a capital value of greater than €2.3 million, who does not have a PFT Certificate, will be taxed on the excess over €2.3 million at 41%. This is an additional tax, over and above the normal taxes that will apply to drawdown of pension funds. So an individual who retires with a pension fund of €3 million and no PFT Certificate will pay €287,000 in tax before drawing their pension benefits in the normal way.</div><br /><br /><strong>How can we help?</strong><br /><br /><br /><div>We can gather the required information from the various pension schemes, calculate the capital value of pension benefits in Defined Benefit and Public Sector schemes, calculate the Personal Fund Threshold and prepare the application for submission. </div>Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-41203760980197990692011-03-07T08:26:00.003+00:002011-03-07T08:53:24.526+00:00The world will end when men & women pay the same for insuranceI <a href="http://fergablog.blogspot.com/2011/03/unisex-premiums-for-insurance-deferred.html">wrote recently</a> about how insurance premiums of all sorts will have to be harmonised for gender from 21st December 2012 following a European Court of Justice ruling. So from then on it will be illegal to charge different premiums for men and women for insurance. <br /><br />But it will never happen!<br /><br />As it turns out, 21st December 2012 is the day that the world ends. This is the day that the Mayan calendar ends and according to many <a href="http://www.december2012endofworld.com/">highly respected sources</a>, it will be the date that the world will come to an end. Google "End of World 2012" if you don't believe me. The internet never lies. <br /><br />Oh those cunning Europeans.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-30864296898618189092011-03-03T20:01:00.001+00:002011-03-03T20:01:40.984+00:00Testing Posterous<div class='posterous_autopost'>Nothing to see here folks. Just testing!</div>Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-39726925221586199192011-03-03T18:00:00.004+00:002011-03-03T18:08:22.993+00:00TRS online only...and Revenue on YouTube<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHs267Os7uCC_Kxa79VgS8-XH10Sz5OQHjQ_UlPBb0te6Jv-NJWFno5UXcvMu3d4yic8bEs1owaeltyxeDMSZ_IpGQX3vQEbB-H6_On9leqXSLyZZQjep_D1G_Xatq9lZKqArvXWBGZyk/s1600/logo_revenue.gif"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 320px; height: 98px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHs267Os7uCC_Kxa79VgS8-XH10Sz5OQHjQ_UlPBb0te6Jv-NJWFno5UXcvMu3d4yic8bEs1owaeltyxeDMSZ_IpGQX3vQEbB-H6_On9leqXSLyZZQjep_D1G_Xatq9lZKqArvXWBGZyk/s320/logo_revenue.gif" border="0" alt=""id="BLOGGER_PHOTO_ID_5579915937340123778" /></a><br />I see that Revenue are no longer accepting paper applications for Tax Relief at Source (TRS) on new mortgages - TRS must be applied for online. That might prove troublesome for people who aren't that comfortable with the web, don't have unrestricted access to the web etc. <br /><br />However, Revenue have produced a few snazzy new videos and published them on YouTube to help people through the process. <br /><br />You can get more details of TRS in general by clicking <a href="http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html">here</a> and watch their videos by clicking <a href="http://www.revenue.ie/en/online/mortgage-interest-relief-online-facility.html">here</a>.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-35201572760984301642011-03-01T13:12:00.003+00:002011-03-01T13:28:21.368+00:00Unisex premiums for insurance deferredI <a href="http://fergablog.blogspot.com/2011/02/men-and-women-are-different-you-know.html">blogged last week</a> about today's European Court of Justice hearing in relation to whether or not men and women could be charged different premiums for various types of insurance. This includes life assurance, income protection cover, car insurance - any type of insurance where gender is a factor in the price. <br /><br />Well the Court today decided that gender-based pricing is not in keeping with EU law. BUT they have permitted an extension such that the current pricing methods can continue to apply until 21st December 2012. <br /><br />No doubt our insurance companies will be poring over the full text of the judgement in the coming days to see what needs to be done. But it's business as usual for now...<br /><br />You can read the press release <a href="http://curia.europa.eu/jcms/upload/docs/application/pdf/2011-03/cp110012en.pdf">here</a>.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-33141561683091476182011-02-25T10:25:00.005+00:002011-02-25T10:40:26.536+00:00Men and Women are different, you know<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAtcnxPDsO5dzuOZ-GQ02g5LCakofhD4mkeexBOB9EnmQMoxoMPAcPJtE__3w0vzp-uUa4RMSd0lUFpBHBL8aZNW8u_tIrX5yAUoITLE3QjMz6HT20-Vy7S7kpA0HW2jVSfA2WU1BmmQA/s1600/Men+%2526+Women.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 300px; height: 225px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAtcnxPDsO5dzuOZ-GQ02g5LCakofhD4mkeexBOB9EnmQMoxoMPAcPJtE__3w0vzp-uUa4RMSd0lUFpBHBL8aZNW8u_tIrX5yAUoITLE3QjMz6HT20-Vy7S7kpA0HW2jVSfA2WU1BmmQA/s320/Men+%2526+Women.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5577571792473815490" /></a><br />Insurance pricing relies heavily on statistics. Men pay more for life insurance than women because the statistics show women tend to live longer. Women pay more for Income Protection because the statistics show that women tend to suffer more medium and long-term illnesses than men. <br /><br />However, last year the Advocate General of the European Court of Justice claimed that it is legally inappropriate to price insurance products according to a person's gender. Next Tuesday, 1st March 2011 the Court is due to rule on this issue. <br /><br />Depending on the ruling, this could mean that males and females get charged the same for insurance and assurance products going forward. It could even mean that existing policies need to be re-priced to harmonise for gender, although that would be a massive and costly undertaking, with potential challenges from people who have fixed cost contracts. <br /><br />My guess would be that in the short term, insurance companies are unlikely to bring prices down. What are the bets we see costs of life insurance going up for women and costs of Income Protection going up for men, if rates need to be harmonised for gender?Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-54901529868858268512011-02-19T08:31:00.004+00:002011-02-19T09:43:29.524+00:00Reviewable (me) Whole of LifeThere's a particular type of life assurance product that has been on the market since the 1980s known variously as Reviewable Whole of Life Assurance, Unit-Linked Whole of Life Assurance and Make Extra Commission for the Salesman Assurance. Most life assurance companies have sold this type of policy at one time or another; some still do. <br /><br />The basic idea of this type of policy is usually that you pay a premium, often monthly, and your premium pays for life assurance cover - a lump sum in the event of your death - and also buys units in a fund, providing you with a lump sum that you can cash in after some years. So far so good. The sales pitch usually focuses on the fact that it's whole of life, (meaning that the policy doesn't expire at any fixed date and you can therefore choose to keep your life assurance cover for as long as you need it) and that unlike other types of life insurace policies it acquires a cash value, so you can decide to stop the policy if you do decide you don't need the cover any more and can cash it in. The inference is generally that this is better than paying into a policy that only pays out on death and will expire at the end of the term if you're still alive - "dead money". <br /><br />Here's a list of reasons why I don't like this type of policy and wouldn't sell one to an enemy, never mind a client. <br /><br />(1) Review clauses. While the policies can theoretically continue for the rest of your life, there are always premium review clauses - often after 10 years, each subsequent 5 years and when you reach age 70, annually. At these reviews, the life assurance company can put up your premium to maintain the same level of cover or can ask you to reduce your cover if you want to continue paying the same premium. The older you get, the more frequent the reviews become so that eventually you'll be asked to pay so much to maintain your life cover that it just won't make any financial sense. That's not true "whole of life" cover. <br /><br />(2) Variable cost of life cover. Aside from the periodic reviews, the cost of the life cover is not fixed. Let's say you start a policy paying €100 per month and at the outset €50 of this is paying for your life cover and €50 is buying units in the fund. This 50/50 split is not fixed and as you get older, the split internally will change <em><strong>without you being notified</strong></em>, so that it could be 60 life assurance/40 fund, 70/30 and so on, while you still pay the same €100 per month. <br /><br />(3) The policy can eat itself. If the internal split between the cost of life cover and the amount diverted into your "savings" fund swings so far in the direction of the life cover that the life cover cost actually exceeds the monthly premium you're paying, the policy can perform a feat that even Hannibal Lecter would have baulked at - it can start eating itself. So going back to the example above, if you're paying a premium of €100 per month and the internal cost of life cover eventually exceeds €100 per month, the policy can start eating into the fund you have accumulated to subsidise the cost of life cover. Over time, the cash value of the policy gets eaten away and can eventually dwindle to nothing. <br /><br />So my advice is to avoid these reviewable whole of life policies like the plague. There are alternatives. Several companies offer Guaranteed Whole of Life cover - life cover at a guaranteed, fixed cost for the rest of your life. It's expensive, but remember that at some point the policy WILL pay out the life cover and you have complete transparency and certainty around what you're paying, now and into the future, and what you'll eventually get. <br /><br />Anyway, most of us don't need Whole of Life cover. For many people, the need for life cover diminishes over time - the mortgage and loans get paid off, the dependent children leave the nest and become financially independent, we build up pension funds, savings and investments so that our death is no longer a financial burden on anyone. For anyone in that position, it's far more cost-effective to take out life insurance cover to fulfil a need for a fixed period of time - Term Life Insurance is invariably cheaper than Whole of Life. <br /><br />If you still can't get past the "dead money" idea - that premiums paid into Term Life Insurance are dead money if you survive to the end of the term, consider two things: - (a) you'd pay extra for a horrible reviewable Whole of Life policy. Do a cheaper Term Life Insurance policy and put the difference into a savings account every month. You'll know exactly what you're paying for life cover and what you're saving and you'll still have a lump sum to draw on when you want. (b) You pay for insurance on your home and car and don't expect to get a return from either if you don't claim. Life insurance is no different.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-4521044388320717182010-09-29T15:11:00.005+01:002010-09-29T15:21:44.062+01:00Get Your Affairs in OrderThe title of this blog piece has nothing to do with Tiger Woods, Wayne Rooney or any of their ilk. I came across <a href="http://www.mcgibney.com/Personal_Affairs_Checklist.pdf">this checklist</a> on Chartered Accountant Tommy McGibney's excellent <a href="http://mcgibney.wordpress.com/">tax blog</a>. <br /><br />Like most good ideas, it's a simple one. While most of you have already made a Will (haven't you?), this is a simple checklist detailing where various important documents, bank accounts, life assurance policies are held and who the relevant contacts are. <br /><br />I'd strongly urge everyone to take an hour or two to complete this, make a few copies and let a few trusted people know where your checklist is kept. In the event of your death, it could make matters so much easier for those you leave behind.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-61951353822708203252010-07-19T14:02:00.003+01:002010-07-19T14:41:35.168+01:00MBNA - the good, the bad and the...<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbK7Md7KauGB5_ZF4wyvQfwhIdAc4JwGXxiyM-nGt_du09ePrawAmi-omwACoh6CZFBau-TyOKo_YAMhVK7R-_7oqjW-SkJgfuuNtiItcpbEJtmUgl5DW8fKqXwEzQrG9gXEqmyytlFx0/s1600/mbnaIreland.PNG"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 122px; height: 96px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbK7Md7KauGB5_ZF4wyvQfwhIdAc4JwGXxiyM-nGt_du09ePrawAmi-omwACoh6CZFBau-TyOKo_YAMhVK7R-_7oqjW-SkJgfuuNtiItcpbEJtmUgl5DW8fKqXwEzQrG9gXEqmyytlFx0/s320/mbnaIreland.PNG" border="0" alt=""id="BLOGGER_PHOTO_ID_5495612028592144130" /></a><br /><br />I have an MBNA crdit card and I (nearly) always pay it off each month in full to avoid paying interest. In general I find that MBNA offer very good customer service, but woe betide anyone who falls the slightest bit behind in their repayments. <br /><br />The Good. Option to manage your account entirely online eliminating paper with robust security. Option to notify MBNA when you're going abroad as they can and do contact you if an unusual transaction (e.g. one from a foreign country) appears on your statement.<br /><br />The Bad. For no other reason than human error, I forgot to pay MBNA by the due date one month. This would be the first time I had been late with a payment in literally years of having the card. I received a phone call from a machine asking me to commit to a payment, which I did. The same (very irritating) machine rang me at least four subsequent times even though I had already made the payment and gone through the long process of "Press 1 for this, Press 2 for that" several times. <br /><br />If you're unfortunate that you end up in arrears with an MBNA credit card, it can turn positively <a href="http://www.independent.ie/business/personal-finance/surviving-the-recession/credit-card-debtors-harassed-1920987.html">ugly</a>. <br /><br />Verdict? A fine service as long as you make sure to pay on time every time.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com3tag:blogger.com,1999:blog-2509277488768172125.post-1353406695353963422010-07-01T11:02:00.005+01:002010-07-01T11:17:09.069+01:00Deposit Guarantee Scheme extended<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhK0pI0eTcWiD3Km1cPQzk-ut-QiHzxcbY3ToF4py7f39FKoJ9fyozWKjxpT3hiGK6yhgfiLMfkT-tgoneu8RMvhQ8GCx2hdAsqTDTUQSBh2bfB4j8bBb-XoVbg2zikEAbPLFPLshvJWFs/s1600/Euro+notes.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 45px; height: 123px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhK0pI0eTcWiD3Km1cPQzk-ut-QiHzxcbY3ToF4py7f39FKoJ9fyozWKjxpT3hiGK6yhgfiLMfkT-tgoneu8RMvhQ8GCx2hdAsqTDTUQSBh2bfB4j8bBb-XoVbg2zikEAbPLFPLshvJWFs/s320/Euro+notes.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5488878573820327858" /></a><br />The Department of Finance has announced that the Credit Institutions (Eligible Liabilities Guarantee) Scheme (the ‘ELG Scheme’) has been extended from its original end date of 29th September 2010 to 31st December 2010. <br /><br />It's important to note that there are two deposit guarantee schemes in operation - the Deposit Guarantee Scheme, which covers all deposits up to €100,000 and does not have an end date and this ELG scheme which covers deposits in excess of €100,000 and has been extended to 31/12/2010. <br /><br />It's also important to make sure you know if your own bank is part of either or both schemes. Not all banks operating in Ireland are part of both schemes and some are part of neither, as they participate in their own country's deposit guarantee scheme. <br /><br />See the Department's press release <a href="http://www.finance.gov.ie/viewdoc.asp?DocID=6348&CatID=1&StartDate=1+January+2010&m=">here</a>. <br /><br />Feel free to talk to us about your deposits and their security. We are authorised to arrange deposit accounts and have attractive rates for demand, notice and fixed rate accounts for individuals, corporate customers, charities and pension funds.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-28513449062113903052010-06-16T17:16:00.006+01:002010-06-16T17:27:24.492+01:00Mortgage lending in Ireland has fallen off a cliff<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsQ5bgdlNbwhyphenhyphenaUqvGpSBQhxw2lAyZ7X7r6oHDmuoxXZq8Ai2pG70A9nKTHVK90ULeUsOc_Qqbj0iML1pUaUSNIZuM2VdeuQCaBQYdJQZXwVzQZB_gNCyz2aQm-0nHFs1mzya4QgwTmGw/s1600/Bonkers+logo.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 230px; height: 95px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjsQ5bgdlNbwhyphenhyphenaUqvGpSBQhxw2lAyZ7X7r6oHDmuoxXZq8Ai2pG70A9nKTHVK90ULeUsOc_Qqbj0iML1pUaUSNIZuM2VdeuQCaBQYdJQZXwVzQZB_gNCyz2aQm-0nHFs1mzya4QgwTmGw/s320/Bonkers+logo.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5483406898843842754" /></a><br /><br /><em>This is a guest post written by Simon Moynihan, Communications Director at <a href="http://www.bonkers.ie">www.bonkers.ie</a></em><br /><br />"A bank is a place that will lend you money if you can prove that you don't need it."<br /><br />Bob Hope could have written that line about lending in Ireland today. With high deposit rates, it’s a great time for savers, but borrowing has become more and more difficult each year since the bust. Customers have known for some time that the game has changed, but many banks still insist that they are open for business and approving large numbers of home loans every day.<br /><br />A few weeks ago the Irish Banking Federation and PWC gave us numbers that tell a very different story. In their latest quarterly report on the Irish mortgage industry, they showed that mortgage lending is still very much on the slide. In the first quarter of this year, there was less money approved and funded for mortgages than at any other time since the beginning of 2005 (which is as far back as the IBF/PWC numbers go).<br /><br />In fact, total residential mortgage lending in Ireland was just €1.22bln in the first quarter of this year. That’s a drop of 39% on the same quarter last year, and a drop of 85% on the first quarter of 2006. By anyone’s measure, mortgage lending has fallen off a cliff.<br /><br />What’s really telling is that only 6,954 mortgages were actually funded in the first quarter of 2010; that’s just 77 per day.<br /><br />Of the small number of people actually getting loans, most of them fall into Bob Hope’s category of people that don’t need the money. 61% of those who walked out of the bank with a cheque were topping-up, re-mortgaging or moving. Basically people that already had homes – and obviously enough equity to prove that they were worthy of the loans.<br /><br />Although 35% of those loans were given to first time buyers, it was the lowest number of first time buyers given mortgages since the (IBF/PWC) records began, but still… good to know that there’s some hope for people trying to get their first home.<br /><br />So what’s going on? Why, when there’s (supposedly) good value in the property market and the banks have been re-capitalised by the taxpayer, are we seeing the lowest number of home loans funded in over six years?<br /><br />Well, the banks know that lending money for depreciating assets is bad business so they are requiring deposits of at least 8% and as much as 20% from first time buyers. Even in a collapsing property market these are very high ratios, and eliminates a heck of a lot of potential borrowers, most notably first-timers of whom just 29 a day are getting the money they need to get into their fist homes. Then there’s the new and rigorous vetting criteria that potential borrowers have to stand up to including financial inspections, job security checks, proof of savings habits, credit checks and so on.<br /><br />Next, there’s the arrears issue. Thousands and thousands of Irish households are simply unable to make payments on their existing loans. The Financial Regulator announced a couple of weeks ago that more than 32,000 residential mortgage holders are over three months in arrears and of that number, 22,000 are more than six months behind. That’s a frightening figure because it accounts for more than 1 in every 25 mortgages held in Ireland. It is so much of a concern that Matthew Elderfield, the new head of the Financial Regulator reckoned that mortgage arrears may be “the biggest legacy issue” of the bust.<br /><br />The arrears story got strong coverage in the press, as it should have. Then Charlie Weston of the Independent did some digging and in a captivating article published on June 2nd he pointed out that that figure for mortgages in trouble is in all likelihood much higher… here’s why:<br /><br />• There’s another 15,500 householders getting mortgage support from the state.<br />• Thousands more have had the mortgages re-structured to interest only or the terms have been lengthened to reduce the payments.<br />• Householders who have lost their jobs are working through their savings to meet their payments.<br />• More cash-strapped householders have negotiated payments that are a fraction of their standard mortgage payments.<br /><br />These loans are obviously in trouble but they are not included in the official arrears figures compiled by the Financial Regulator because they are still considered to be performing. When Charlie Weston was researching his article he spoke to Aoife Walsh, a representative of the housing charity Respond, and she reckoned that 70,000 householders could be in, or in danger of default. That’s more like 9% of all residential mortgages in the state, or 1 in every 11.<br /><br />Next, there’s the government-authorized delay on legal repossessions for all lenders regulated by the Financial Regulator – better known as the Moratorium. Introduced back in 2009, a bank could not begin proceedings to repossess a home unless there was at least six months worth of arrears. This was good news for struggling homeowners of whom we now know there are many, but certainly a time-bomb waiting to go off.<br /><br />Then in February 2010, Brian Lenihan announced that the Moratorium had been extended to 12 months. It looks like the potential shock of 22,000 repossessions kicking off was just too much for an ailing government to stomach. But doesn’t this reprieve have to come to an end sometime? Or, if the numbers in arrears keep escalating, should we expect to see Moratorium extended again next February?<br /><br />Throwing even more fuel on the fire, the Irish Times reported that banks like Anglo Irish have begun selling off mothballed apartment schemes at knockdown prices. The first of the schemes to be sold off are in decent locations and serviced by decent amenities, so they should sell – but most likely to investors rather than the first time buyers who could really use them.<br /><br />Sadly, it’s unlikely that first time buyers would get approval to buy these apartments; after all it’s the banks themselves that are now flogging them off. In addition, selling entire apartment schemes at hugely discounted prices will affect sale prices elsewhere, further depressing the market and making it harder to borrow to buy homes!<br /><br />So how much have things really changed? Well, in the last quarter of 2005, just as the Irish property market began to boil, Irish banks gave out 8 times as many mortgages to 8 times as many people as they did in the first quarter of this year. Back then, 55,618 residential mortgages were funded in Ireland, which is 605 per day. Their total value was a staggering €10.34 billion. You guessed it – that’s more than 8 times as much money as Irish borrowers received in 2010.<br /><br />It’s difficult to know when this will turn around, but the signs say no time soon. There’s simply too much pressure on the banks and very little incentive to for them to lend despite catchy claims and ad campaigns. Although we’ll never know the exact circumstances of the 77 people per day that are actually getting mortgages, one could make an informed guess they are seriously financially stable and as Bob Hope says, are able to prove they don’t really need the money.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com2tag:blogger.com,1999:blog-2509277488768172125.post-80235515180332902642010-05-12T08:11:00.004+01:002010-05-12T08:20:20.325+01:00Guide to Dealing with Mortgage Repayment Difficulties<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOLbfZsL6pL0y5RTdgUh0MdBJ1voqp5iu7FjTs8dsMxRqJ98tadToICXifXUtxleA4CciEjY8j1kDV92UlwKJHepZGATkYVgyyt3yowJGQQLgWULGwN2LBC_aecDqtXO4FnWcyRmfS2JI/s1600/IBF+logo.jpg"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 110px; height: 86px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOLbfZsL6pL0y5RTdgUh0MdBJ1voqp5iu7FjTs8dsMxRqJ98tadToICXifXUtxleA4CciEjY8j1kDV92UlwKJHepZGATkYVgyyt3yowJGQQLgWULGwN2LBC_aecDqtXO4FnWcyRmfS2JI/s320/IBF+logo.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5470279624652145586" /></a><br /><br />The Irish Bankers' Federation have published a guide containing some basic advice on what to do and what not to do if you experience difficulty meeting your mortgage repayments. <br /><br />It can be downloaded from their website <a href="http://www.ibf.ie/pdfs/Mortgage_repayments_guide_Feb10.pdf">here</a>. <br /><br />There may possibly be comments about the irony of the IBF publishing such a guide when it could be argued that practices of some of their members may have contributed to some people's current difficulties, but we are where we are. It's a useful guide nonetheless.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com1tag:blogger.com,1999:blog-2509277488768172125.post-23506154926109988932010-05-02T17:11:00.007+01:002010-05-02T18:54:59.039+01:00National Solidarity Bond - is it any good?<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt48JrA9J5cKMuAWizigIeLyXocbaxZistPeVYOIXpGCnv-H2lOwmdSWXyA8oHlycOTPCra1b34TDt-vJBVx7wlu2avgEp60UhZZGqIVtfwrngxKo8c8hAmwmSBqGxui4-a1ngfVroGj0/s1600/masthead.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 320px; height: 55px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt48JrA9J5cKMuAWizigIeLyXocbaxZistPeVYOIXpGCnv-H2lOwmdSWXyA8oHlycOTPCra1b34TDt-vJBVx7wlu2avgEp60UhZZGqIVtfwrngxKo8c8hAmwmSBqGxui4-a1ngfVroGj0/s320/masthead.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5466706988432404738" /></a><br /><br />Details of the National Solidarity Bond were announced last week, the idea having first surfaced in the most recent Budget speech. The idea is that you invest an amount of money from €500 to €250,000 for a period of ten years, after which you get a State-guaranteed return of 50%, which is fixed from the outset.<br /><br />In further detail, the return is 50% Gross over 10 years (AER 4.14%) consisting of 10% in 10 annual payments of 1% which are subject to DIRT at the prevailing rate (currently 25%) plus a 40% Tax free lump sum at the end of 10 years. <br /><br />The net after tax return is 47.5% (AER 3.96%) assuming DIRT remains at 25%. Minimum investment is €500. Maximum individual investment is €250,000 (or €500,000 from 2 joint applicants or €750,000 from 3 joint applicants). If you do not have €500 to invest there is a facility to save through regular lodgements. You can access your money at any time by giving 7 days notice. There are no fees, charges or sales commissions.<br /><br />The money will be used by the Irish Government. As the blurb says - "The Government of Ireland wants to make it easy for residents of Ireland to help to fund the Government’s capital investment programme, develop important infrastructure, stimulate economic recovery and create employment."<br /><br />Looking at it purely as an investment option, I'd say it should only be considered by someone who is 100% sure they do not need access to their savings earlier than ten years as otherwise the rate of return will be just 0.75% per year after DIRT tax, which is paltry. If you are going to leave it for the 10 years, the return of 4.14% per year, before DIRT tax, isn't going to make you rich but it may be useful as a safe haven alternative to bank deposits for some long-term cash. This of course assumes you have confidence that a guarantee by the Irish State is a safe haven.<br /><br />It is irritating that the 1% levy on other savings & investment products doesn't apply to this bond, which is an example of the Government using the tax laws to suit their own causes. <br /><br />Further details available <a href="http://www.statesavings.ie/products/Pages/NationalSolidarityBond.aspx">here</a>. <br /><br />(Note: This product is not available via brokers. The above article should be considered a personal opinion and not professional advice.)Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com0tag:blogger.com,1999:blog-2509277488768172125.post-79864684497429388112010-04-13T10:10:00.004+01:002010-04-13T10:33:05.359+01:00Don't forget to tell the taxman<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdpwrDHm4n0LOnZQ8uFIzlwyoHR6PrK6Dqu4_y5jZN0AzZSOAGPPbzCmPHJCFhS1HZlOQ-5fxaR9jWe_gqFnWwU9ZFdy04fgKjbtbpJv31C9s73Jvtv_ZVCXQTobdksaKSI7gx6jI_VzQ/s1600/logo_revenue.gif"><img style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 320px; height: 98px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdpwrDHm4n0LOnZQ8uFIzlwyoHR6PrK6Dqu4_y5jZN0AzZSOAGPPbzCmPHJCFhS1HZlOQ-5fxaR9jWe_gqFnWwU9ZFdy04fgKjbtbpJv31C9s73Jvtv_ZVCXQTobdksaKSI7gx6jI_VzQ/s320/logo_revenue.gif" border="0" alt=""id="BLOGGER_PHOTO_ID_5459551764978082818" /></a><br />If you're a PAYE employee and have a private pension policy that's paid through your bank account by Direct Debit (and NOT through your salary) you presumably have applied for and received your tax relief by way of extra Tax Credits. (You have got around to applying for your tax relief, haven't you? If not, do it NOW!)<br /><br />Two things to remember: - <br /><br />(1) You can also apply for a refund of Employee PRSI on the contribution at the end of each tax year, provided that you've already been granted the tax relief. Use <a href="http://www.revenue.ie/en/tax/it/forms/cgprsi1.pdf">this form</a>. <br /><br />(2) If you increase, reduce or stop your contribution, don't forget to let Revenue know. Revenue usually grant extra tax credits on pension contributions on the assumption that the contribution will remain the same until further notice. So if, for example, you stop your contributions altogether, you must notify Revenue or else you'll continue to get tax relief on a contribution you're no longer making and will have to give it back eventually. On the other hand, if you increase your contributions, you won't get your extra tax relief until you let Revenue know.<br /><br />This applies to PAYE employees with Personal Pensions, PRSAs or AVC PRSAs who are paying their contributions gross and NOT via a salary deduction arrangement.Liam D. Fergusonhttp://www.blogger.com/profile/09321187021162975268noreply@blogger.com2