The health and welfare of your business partner is a really important factor in your financial planning. After all, they have probably been working alongside you since you came up with the idea for your business. They also have shared the highs and lows as your business survived those difficult early years, and hopefully has grown as time went on. Your partner has shared the stresses and strains, and hopefully together you’ve built a business you’re both proud of. It wouldn’t have been the same, or indeed may not have happened without them.
One of the more important business activities of any company owner or partnership is the whole area of risk management. So what do you think about when you think of something “going wrong”? Is it a fire in a warehouse, an accident involving a company vehicle, maybe somebody tripping and falling in one of your retail outlets? Is it someone suing you for poor performance in your business activities? These are all areas where businesses build contingency plans or put insurance in place. However, research in the UK has shown that 52% of businesses would cease trading in under a year if a key person died or became critically ill.* This is a risk that you must manage, and thankfully there are solutions available to do just that. Business Protection There is a range of business protection solutions available to help businesses survive the death or indeed the serious illness of someone whose loss would result in a financial hit for a business. These solutions provide several benefits for businesses. • They offer real peace of mind benefits to the directors or partners as they remove the financial worries associated with the death or serious illness of a colleague. • They remove the need for businesses or surviving partners to borrow money to buy out their partner’s share of the business. • They remove the need for a surviving family member to take the deceased’s place in the business. There are a number of different types of business protection solutions available to suit the different types of business structures. Co-director’s insurance Each director insures themselves against the death of their co-director, enabling them to buy out their co-director’s shares on death, and serious illness if they wish. As an alternative, the insurance can be put in place by the company itself. Partnership insurance Similar to the above, a partnership takes out insurance, protecting itself against the death or serious illness of an individual partner, enabling them to compensate the deceased partner’s estate for their share of the partnership. Key person insurance This helps a business to minimise the impact of the death or serious illness of a key employee. The insurance can be used to quickly attract a replacement employee or indeed to pay off any loans of the company that may have been guaranteed by the deceased. The key to finding the right solution is getting the right advice. And that’s where we come in. If protecting the future of your business is a concern to you, please give us a call and we can walk you through your options.
0 Comments
There are approximately 349,500 people in Ireland who work as stay-at-home parents – and the vast majority of these (94%) are women*. The work they do is invaluable for their families and irreplaceable for the community, yet more than 8 in 10 people agree that the role of the stay-at-home parent is either under-supported or undervalued by society in Ireland. This is according to the findings of a new survey from the rapidly growing life and pensions provider, Royal London Ireland. The nationwide survey of 1,000 participants in Ireland sought to understand people’s perception of the value of stay-at-home parents. In addition to this, Royal London Ireland compared these perceptions with their own research into the monetary value of the homemaker. The survey revealed that 93% of people underestimate the financial value of the stay-at-home parent. According to the life and pension provider’s calculations, which are based on real-world wage data, the cost to employ someone to do the ‘duties’ performed by stay-at-home mams and dads would be an estimated €53,480 per annum. Despite this, survey participants estimated the potential ‘salary’ of the stay-at-home parent at an average of €28,460 per year. Commenting on the findings, Royal London Ireland said, “While the role of the stay-at-home parent could be described as ‘priceless’, it is interesting to gauge the public’s perception of its value through our annual survey. It seems people continue to undervalue the role, pitching it at €28,460 which is similar to last year’s estimate by survey respondents of approximately €28,000**. It is also well below what we have calculated as the economic cost in 2022, which is €53,480.” Highlights from the Royal London Ireland Stay-at-home Parent Survey included:
Royal London went on to say, “While 18% of people believe the role of the stay-at-home parent is held in high esteem by Irish society, it’s interesting to see that a large majority (82%) believe homemakers are not supported enough or valued by society. “What is somewhat less surprising, given that this role is predominantly filled by females, is that more women than men (88% vs 75%) believe that Irish society doesn’t support or value the contributions of stay-at-home parents. This is despite the number of stay-at-home dads more than doubling in the 10 years from 2009 to 2019, rising from 7,000 to 19,900.*” The Costs Royal London Ireland considered a list of duties usually carried out by stay-at-home parents, before researching the cost of employing someone to do these jobs. The duties are ones that parents carry out on a weekly basis such as cooking, cleaning, driving children to their various activities and so on. The calculations reveal that the annual cost to employ someone to do the household jobs usually completed by a stay-at-home parent would be an estimated €53,480. “While the duties and responsibilities that fall upon stay-at-home parents will vary from family to family, we have run some calculations of how much it would cost to replace someone in this role. Interestingly, our evaluation of the cost is more than the €48,946 reported by the CSO as the average annual earnings of a person in full-time employment. Our figures reveal that it could cost approximately €53,000, if not more, per year. And when we asked our survey respondents how much they think it would cost to employ someone to perform the duties of a stay-at-home parent, most under-estimated it, by thousands.” According to the survey, the majority of people (81%) estimated the stay-at-home parent’s ‘salary’ to be €40,000 or less (see Appendix). While 12% of people estimated it to be between €40,000 - €50,000, and just 8% of people estimated it to be €50,000 or more. Royal London concluded, “It’s understandable that, without doing the calculations, many people may not accurately estimate what the cost would be to replace the stay-at-home parent. What is surprising, is just how much they undervalue it by. An accurate evaluation of this cost, from a financial planning perspective, is an important figure to contemplate by every family. If a stay-at-home parent was to pass away unexpectedly, their loved ones could be left with a large financial gap to fill during what would already be a very difficult time. And while money can never replace a parent, having adequate financial protection in place can help provide families with a financial safety net to meet some of these parenting costs." We can help you understand how much and what type of financial protection you might need. In order to secure a financial future, starting a pension is one of the smartest financial decisions you can make.
But what is best, to wait to be included in the upcoming Auto Enrolment or to set up an Occupational Pension? Auto-Enrolment is due to be rolled out during the second half of 2024 and is for employees aged between 23 & 60 who are earning a salary of €20,000 or more. If these employees have no other pension arrangement in place, they will automatically be enrolled to this scheme with employers required to facilitate auto enrolment through their payroll. The Auto-Enrolment is a Defined Contribution arrangement with contributions being paid by the employee, the employer, and the State. There are set contributions to be paid and there will be no flexibility with this. Contributions will increase every three years as follows. Year Employee Contribution Employer Contribution State Contribution 1-3 1.5% 1.5% 0.5% 4-6 3% 3% 1% 7-9 4.5% 4.5% 1.5% 10 + 6% 6% 2% *Employer and State Contributions are capped at €80,000 salary. The Auto-Enrolment scheme offers only four investment choices and will run up to State Pension age with no access to funds prior to this. Although it is of course welcome that more people in Ireland will now have a pension in retirement, it must be understood the employees included in the Auto-Enrolment will not avail of the same benefits available from an Occupational Pension. An Occupational Pension can be open to all employees with no strict criteria to be included. This gives you the opportunity to include employees in a pension now ensuring that they do not lose out on valuable time and savings ahead of their retirement. An individual occupational pension gives employees more flexibility in terms of how much they want to contribute, a wider range of investment choices become available to them with the added benefit of financial advice. Under an occupational pension members have the option of taking their benefits from age 50 and move their existing pensions to new employments if required. For contributions made by the employee, into an occupation pension, they can avail of tax relief at their marginal tax rate, and this is extremely beneficial for employees within the 40% tax bracket. It is important for employers to seek advice to satisfy future obligations in terms of pension provisions under the traditional route by setting up an occupational pension scheme or employer sponsored PRSA. Contact us to discuss the impact Auto-Enrolment can ahve on your company and your employees. |
John CumminsWrite something about yourself. No need to be fancy, just an overview. Categories
All
Archives
March 2023
|