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Financial Advisor Dublin

 

What does a Financial Advisor do?

 

The simple answer is: A Financial Advisor suggests ways in which people can better manage their money to meet their particular needs and goals.

 

A Financial Advisor, however, offers much more than this…

 

For example, a Financial Advisor can advise on and suggest strategies to help you reach your financial objectives relating to budgeting & cash management, debt management, tax planning, inheritance & estate planning, savings & investments, retirement planning, and life insurance solutions.

 

A Financial Advisor will also provide valuable insight, using these strategies, for how you should be managing your money to reach your financial goals at every crucial life stage, be it, buying your dream home, getting married, planning for children, advice when changing jobs, moving up in the workplace or starting your own business, and reaching your retirement goals. This in turn will help you make smarter decisions and avoid making expensive mistakes in life, which will make it easier for you to achieve your goals.

 

Essentially, the advisor’s mission is also to close the gap between where you are currently (financially) and where you’d like to be.

 

Let’s take a deep dive into the various solutions available:

 

 


How can a Financial Advisor help me?

 

 

Financial Planning

Dublin Financial Advisor | Financial Planning

 

Financial Planning gives a Financial Advisor the opportunity to get to know you, to understand your financial needs and concerns, and establish what you would like to achieve financially – your goals and objectives.

 

However, financial planning is not only about the destination, but more importantly, its about the journey through which a financial planner will guide you through, using the following techniques:

 

 

1. Monitoring & Analysis:

Properly monitor and grow your income, carefully analyzing spending patterns and budgeting to manage your cash flow more effectively.

 

2. A Tailored Plan:

A detailed, step-by-step plan that’s tailored to your individual situation, and that can develop with you as you move through your different life stages.

 

3. A Investment Strategy: 

Choosing the right Investment strategy (to combat inflation) to achieve your objectives in a the appropriate time frame.

 

4. Risk Planning:

Plan for any unexpected risks that could potentially set you back with an unwanted financial burden, for example, putting in place adequate Life Insurance to cover debts or income to ensure your loved one’s that are left behind are covered financially.

 

5. Financial Confidence: 

Education and context to help you understand and gain confidence in your financial plan.

 

6. Guidance:

Guidance and support to provide good savings and investing habits and help you avoid common investing mistakes.

 

If you concentrate on staying in control of your day-to-day finances, reduce debt, and save regularly, these are responsible actions that will help you to keep on track with meeting your goals; and have the financial freedom to make the choices that allow you to enjoy life!

 

 


 

Pensions & Retirement

Dublin Financial Advisor | Pensions

 

Saving for retirement is extremely important. People are living longer and are leading more active lives in retirement. As a result, it is important to think about where your income will come from when you retire.

 

Pension saving is one of the few areas where you can still get substantial tax relief. For example, Pension offer tax breaks and incentives, such as tax relief on contributions where you can claim up to 40% tax relief on all your pension contributions (at your higher rate of income tax).

 

Some people may have an opportunity to accumulate wealth without using pension schemes – perhaps through their business ventures or other assets. But for most people a pension scheme is likely the best way to supplement their current lifestyle and income into retirement.

 

Important Considerations for Pensions:

 

1. Planning for Retirement: 

Taking control of your retirement planning decisions earlier on in life, can help you build up an extremely valuable asset.

 

2. Adequacy of Income at Retirement: 

Although the State pension is intended to ensure that everyone receives a basic standard of living in retirement, without a Private Pension in place the State Pension alone may not be enough to meet your income needs in retirement.To illustrate this, the current Irish State Pension is €253.30 per week (personal rate 2022). The average wage is €862 per week (CSO – Q4 2021). This leaves a shortfall / average weekly gap of €608.70.

 

3. Considerations for Women:

Regards pension provision, there are a number of areas such as maternity leave, part-time working and breaks in employment where pension advice may be of particular interest for women to consider Also, women on average live longer than men and so are more likely to need their pension to last longer.

 

4. Protection for Families: 

Pension schemes can provide protection in the form of lump sums and pensions to dependents in the event of a member’s death.

 

5. Tax Advantages: 

The State provides generous tax reliefs through Pensions, such as on Tax relief on contributions made to pensions, Tax-free growth within your Pension Investment, and a Tax-free Lump Sum on retirement.

 

By taking small steps and committing to putting away a certain amount into your pension each month, this can work towards the life you want to live in retirement. When it comes to advice on one’s finances, there is no ‘one-size-fits-all’ approach. The best pension option for you depends on your personal circumstances and work situation so its advisable that you speak to a financial advisor first.

 

Pensions for the Self Employed

Pensions for Company Directors

Company Profits into Personal Wealth

Pension Options when Changing Jobs

https://www.smartfinancial.ie/schemes/pension-transfers/

UK Pension Transfers to Ireland

Buying Property with your Pension

 

 

 

 

 

 

 

 

 

 

 

 


 

Saving and Investments

Dublin Financial Advisor | Savings and Investments

 

When it comes to planning your future, investing is fundamental – simply one of the most essential decisions you can make if your goal is to be financially successful. Simply put, if you had to keep your savings on deposit in your local bank account or credit union, you’d be losing money (when adjusting for inflation). 

 

A sensible strategy that many investors use to reach their particular goals is that of multi-asset funds. The purpose of allocating money to a multi-asset strategy is to maximize the opportunities for compelling risk-adjusted returns by taking advantage well diversified asset classes.

 

Take the Zurich Prisma 4 Fund for example. With an aim to generate long-term capital growth through capital gains and income from investing across a diversified range of global asset classes – equities, bonds, property, commodities, cash and alternative assets, the fund has a medium to high risk rating set to outperform over rolling 5 year periods. At the time of writing, the fund has achieved an annual fund performance of 7.1% p.a since its launch. Cash, which invests in deposits and money market instruments has delivered -0.75% p.a over a similar period.

 

Why Cash is NOT King:

 

In addition to the above-mentioned example, over the last number of years, 10, 20 even 50 years plus, returns from investments such as equities and bonds have far exceeded that of cash. Investors sometimes think of cash as a safe haven during periods of volatility, or even as a steady source of income. However, with interest rates being relatively low, the returns you may be getting from deposit accounts probably won’t deliver the long-term returns you need.

 

According to Investopedia, the U.S. stock market has long been considered the source of the greatest returns for investors, outperforming all other types of investments including financial securities, real estate, commodities, and art collectibles over the past century. A 10-year holding period performed even better, with returns averaging about 13% – and zero negative returns.

 

What are your goals? 

 

Before you decide where to invest or put your savings, you may want to first set out your future goals. 

 

Examples of such can include: Your wedding & marriage, Securing your dream home & raising a family, building up funds for your children’s education, starting a new business, or saving for retirement.

 

Once you have identified your goals, a Financial Advisor can create a personalized plan suited your investment strategy to help you reach them.

 

Investment Bond

 

 

 

Regular Savings Plan

 

 

 

Children's College Savings Plan.

 

 

 

 

 


 

Income Protection

Dublin Financial Advisor | Income Protection

 

Income protection insurance is an insurance policy that pays out a regular cash payment (each month) that replaces part of your lost income if you are unable to work due to a medium to long-term illness or disability (It does not cover redundancy). It must also not be confused with private health insurance.

 

To qualify for this insurance, you must be in full-time paid work or be self employed. Cover can be obtained between age 18 and 59, and can reach age 70 with certain insurers. The replacement income starts paying out after a certain period of time. This is called the deferred period.

 

Do I need Income Protection? 

 

Consider this… You are put into a situation where an illness or injury stops you from working for a couple months or even years. You are trying to recover and get better, and in so doing you ask yourself, “where am I going to get the money to pay for my monthly expenses and commitments??”

 

Now sure, you may get some sick pay from your employer, or have some savings in the bank, however, that probably won’t nearly be enough to pay for expenses for medical treatments or pay off monthly bills such as your mortgage repayments, car insurance, utilities, weekly groceries, and children expenses & education (well let’s not go down that road…). Considering the weight of the above, you would indeed need sufficient income to support yourself and your family financially. Here, Income Protection has you covered!

 

Important considerations for Income Protection:

 

You may also need income protection if you:

  1. Are self-employed and would have no source of income if you couldn’t work due to illness or disability.
  2. Have little or no sick pay from your employer.
  3. Have no ill-health pension protection.
  4. Have dependents who rely on your income.
  5. Have no other source of income.
  6. Do not have sufficient benefits to replace your lost income and/or cover your expenses.

 

> How much cover can I get?

> How much does it cost?

> What additional benefits are available?

 

Executive Income ProtectionPersonal Income Protection

 

 

 

 

 


 

Mortgage Protection

Dublin Financial Advisor | Mortgage Protection

 

Mortgage Protection cover is a life assurance policy designed to protection your home by paying off the outstanding mortgage (loan) in the event of your death – thereby, protecting your family from a financial burden.

 

Prior to arranging your mortgage with your lender, you are entitled to arrange your own Mortgage Protection insurance through any Life Assurance company or Intermediary of your choosing – of which most of the time you may be get better value. It is not compulsory to take out the policy with your lender.

 

 

Why is Mortgage Protection important?

1. Compulsory: If you have a mortgage on your home, it is compulsory to take out Mortgage Protection insurance.

2. Protection: It protects your family from a substantial financial burden.

3. Death: If you pass away during the term of the policy, the policy will pay off the remaining amount on your mortgage.

 

 

Dual Mortgage Protection

Joint Mortgage Protection

 

 

 

 

 


 

Life Insurance

 

Dublin Financial Advisor | Life Insurance

It is true that you don’t buy Life Insurance because you are going to die, but because those you love are going to live! No-one likes to think or talk about a time of their passing, however, your loved one’s will no doubt thank you and remember you for considering their future.

 

Life insurance pays out a cash lump sum if you die during the term of the policy. It is one of the most important types of insurance cover available to you and your family because it helps to provide financial peace of mind should something unexpected happen.

 

Do I need Life Insurance?

 

The amount of Life Cover you will need to take out will depend on the Lump sum required to cater for financial circumstances such as the following:

 

  1. To pay off all debts you owe (mortgage, car loan, credit cards)
  2. To invest the money for future income.
  3. To cover any known, large future expenses (e.g., school fees, child’s wedding, etc.)

 

To determine whether you need Life Insurance, you need to first take into account what your financial obligations are and what impact they will have on your loved ones if you were no longer around. For example, if you have a mortgage you may want to decide how you plan to fulfill many years of those monthly repayments. If you have children you may want to consider their future education and school or college fees, etc. If you find that you have little-to-no provision for your loved ones (such as savings, sale-able assets, income, investments, or pensions) then a life insurance policy makes a lot of sense.

 

Life Cover should be considered for the following Life Stages or events: 

 

Marriage:

When you eventually get to that special day of tying the knot, a new chapter of joy and adventure begins, but with that, also comes responsibility. When uniting families, so too will you combine your assets. Here, Life Insurance is an important tool to ensure that you both have each other’s well-being in mind should one of you pass away unexpectedly.

 

When you take out a joint policy, or two single policies on each other’s lives, you are making sure that the policy pays out on not just the first death, but also the second, ensuring your surviving dependents are also taking into consideration.

 

Buying a new home:

If you are responsible for your mortgage repayments and you pass away before your mortgage is fully paid off, the burden then falls to your partner or loved ones. Life Insurance, or in this case, Mortgage Protection Insurance (otherwise known as Decreasing Life Cover), will ensure that your loved ones will meet this financial commitment after you are gone. It is also compulsory cover that you need to take out to cover the mortgage.

 

Having a baby:

Here, Life Insurance is one of the more important considerations. This is because there are many costs involved when raising children, such as, crèche, private education, university or college, food, healthcare, clothing and baby essentials, etc. Its important to note that should you pass away unexpectedly, Whole of Life or Term Insurance policies can be used to provide continued support by paying out a lump sum towards your children’s needs going forward.

 

Inheritance Tax: The next generation

When you intend to leave money or assets behind for your children and/or financial dependents, such as a property, its not as easy as simply handing over the keys to them. Depending on the value of the inheritance, they could be paying a sizable amount of Inheritance Tax on the transfer of ownership. A Whole of Life or Section 72 Insurance policy is a very useful Revenue approved policy that is specifically designed to cover the inheritance tax to ensure that your beneficiaries are not short-changed on the amount you intended for them to receive.

 

Planning for a funeral:

According to a 2018 review by Royal London,  basic Irish funeral can cost anywhere from €2,950 to €7,500 and potentially more. Therefore, when discussing a Life Insurance policy with your Financial Advisor, its worthwhile discussing how much additional cover or a Funeral Insurance Policy needed to payout upon your death. This will prevent your loved ones from paying out of their own pocket.

 

 

Level Term Cover

Convertible Term Cover

 

Whole of Life CoverPension Term Assurance

 

 

 

Executive Pension Term Assurance

 

 

 

 

 

 


Serious Illness CoverDublin Financial Advisor | Serious Illness Dublin

 

Serious illness cover is a long-term insurance policy that pays you a lump sum if you are diagnosed with one of the specific illnesses or disabilities that the policy covers. The money that is paid out to you can be used to cover essential bills when going through a challenging time.

 

A few of the many serious illnesses covered are:

  1. Cancer of specified severity
  2. Heart Attack
  3. Stroke
  4. Kidney Failure
  5. Major Organ Transplant
  6. Parkinson’s Disease
  7. Multiple Sclerosis
  8. Loss of Limbs.

 

Why should I consider Serious Illness Cover? 

 

Cancer mortality in Ireland shows that 1 in 4 deaths in Ireland is caused by cancer.

  1. Cancer is the biggest killer in Ireland.
  2. It accounts for approximately 30% of deaths every year.
  3. One person dies from cancer every hour in Ireland. (Source: Irish Cancer Society)

 

Serious Illness Cover can be purchased as a standalone or it can be combined with Life Cover or Mortgage Protection under one policy.

 

Serious Illness Cover

 

 

 

 

 


 

Business Assurance

Dublin Financial Advisor | Business Assurance

 

Business Assurance is essential as it can help put in place monetary arrangements to protect your business financially should you or one of the key persons in the company pass away. Business Assurance can be taken out by a company of any size, where there is a need to protect against the loss of an extremely valued employee, owner, or partner of high financial or strategic importance to the business.

 

With a Business Assurance policy, you pay a regular premium based on the cover required. If the unexpected happens and a person dies, or becomes seriously ill, the policy will provide a lump sum to compensate for this event. This can then be used to offset any financial losses incurred to ensure continuity of the business.

 

Why should I consider Business Assurance for my company?

 

  1. Protection: If a key employee dies, a cash sum is paid to help maintain the business.
  2. Unaffected Profits: Avoid a reduction in company profits.
  3. Continuity: Can help minimize interruption to business activity.
  4. Financial Assistance: Paying your company bills, or paying outstanding bank loans.
  5. Staffing: Can help provide resources to find a suitable replacement for the employee.
  6. Stability: Purchasing a deceased Partners or Directors share of the business, & ensuring their estate receives the shareholding’s market value.

 

Availing of this kind of life insurance can give additional security to your business. As an employer, it can bring you peace of mind in the knowledge that you are protected from the financial fall-out due from the death or incapacity of a very important member of your staff.

 

 

Key Person InsurancePartnership Insurance

Corporate Co-Director Insurance

Co-Director Insurance

 

 

 

 


 

 

Unique benefits of using a Broker

 

 

 

Reviewing your Plans & Policies

Dublin Financial Advisor | Financial Review

 

 

Annual financial reviews gives you an opportunity to evaluate your financial situation.

 

If your personal circumstances have changed, you may need to update your Financial Advisor to ensure that your policies and plans are still suitable to meeting your financial objectives.

 

Protection Policies

 

When we receive that annual renewal notice for our Home & Car Insurance, we no doubt make haste to compare different policies and see where where we can save on our annual premiums or find better value. Similar consideration needs to be given to your protection policies. 

 

This is important because as your personal circumstances change, so do your Life Insurance needs.   

 

Why Review?

 

  1. Suitable Cover: Your cover is still suitable compared to when first taking out your policy – has your debt increased or decreased?
  2. Accurate Cover: You are not under-insured OR paying for cover you don’t need.
  3. Financial Responsibilities: You are aware of your financial responsibilities. Consider income you will need to supplement for the future if you’re no longer around, such as, childcare costs, college or school fees, the mortgage, inheritances, large debts).

 

Life Stage Considerations:

 

  1. Marriage: You may want to ensure that your partner is named as a beneficiary on your Life Insurance policy, not to mention the addition of a new baby.
  2. New Job:A promotion often times means an increase in income – ensure that the level of income on your Income Protection policy is adjusted to meet these needs.
  3. New Debts: Have you borrowed capital to start your own business, or have taken out a mortgage? This is a perfect time to assess your cover.

 

 

Mortgage Protection Policies

 

Usually, because consumers are so excited to obtain their loan when buying a new home, they sign their mortgage protection policy with the bank at the moment of mortgage approval. However, the banks are in many cases tied with only one provider. So the premiums obtained at the time are not very competitive.

 

If you feel you could benefit from more affordable cover on your Mortgage Protection policy, a broker can help search the market and compare a number of policies from different product providers for the most competitive price and cover available. Here’s something to consider:

 

Can I switch my current policy?

 

Of Course you can! You can apply for new insurance at any point during your mortgage. Most of the time, clients who request a quote from an impartial broker save a significant amount of money by switching from their previous policy obtained from the bank.

 

If its the case that you decide to switch your mortgage to a new lender, you can simply assign your policy to your new lender. You will usually have a greater choice of optional benefits that you can take out on the new policy such as Serious Illness cover. 

 

 

 

Pension Plans

 

Why should you consider reviewing your Pension?

 

  1. Save on annual charges
  2. Fund options better suited to your needs & Attitude to Risk.
  3. Calculating projected benefits
  4. Ensuring pension contributions are tax-efficient.
  5. Maximize income potential and options for/at Retirement

 

Reviewing your Pension & Protection policies regularly is VITAL to ensure that your plans are still suitable to your current circumstances, and that you are getting the best possible value on them – giving you peace of mind.

 

 


 

When should I contact a Financial Advisor?

 

 

1. Significant Life Events

 

Marriage:

Going into a marriage, combining two sets of finances can get complicated. A Financial Advisor can help couples set and focus on shared financial goals, and improve on their financial outlook.

 

Divorce:

A Financial Advisor is often needed before a divorce settlement is agreed upon to make both parties aware of their entitlements and help them take control of their finances. For example, a Pension can be one of the biggest financial assets that a person has. Here, a Pension Adjustment Order is an important consideration for the following reason; If one person has a substantial pension, and the other person who worked in the home has no pension, the court can order that part of the pension be shared with your former spouse or partner, and/or any dependents. This is to make sure that each person is provided for.

 

Becoming Parents:

Kids can change the expense structure of your household and add new financial goals to the list. For example, childcare costs, paying for college, and managing varying household expenses. When becoming parents, what is often overlooked is Life Insurance. It is crucial to ensure that your partner and your new born are covered financially should the unexpected happen. For instance, if the breadwinner passes away, a Life Cover policy would pay out the amount needed to provide a steady income for the remaining loved ones, and pay off remaining debts.

 

Inheritance:

If you come across a significant inheritance such as a bequeathed property, gift, or a large sum of money, this is likely one of the most critical moments to consult a expert advice. A Financial Advisor can help you decide how best to handle the inheritance in the short term and advise on a long-term plan that takes all of your assets and obligations into consideration like a succession plan. Inheritance Tax Implications can also be significant, especially with wealthy families.

 

For example: You as a parent owns a property valued at €500,000. Your child (the beneficiary) eventually inherits this property from you claiming ownership of the property. Any amount inherited over the individual Tax-free threshold of €335,000 is liable to Capital Gains Tax (CGT) at the current rate of 33%. So €165,000 (€500,000 – €335,000) would be liable to tax at 33%. Therefore, your child is left with a tax bill of €54,450 (€165,000 x 33%). Now you might be saying, “Well, how do I avoid paying all that tax!?” Here, your Financial Advisor puts your mind at ease and comes up with a solution for a Life Insurance policy called a Section 72 whole of life policy is specifically designed to deal with inheritance tax, by providing a tax-free lump sum to cover the tax bill.

 

Starting or managing a Business:

A Financial Advisor can offer many benefits to helping you start and manage your business, such as:

 

  1. Providing accurate projections that will help you establish and then grow your business.
  2. Ensuring that your personal finances are in good order along with your business finances. The two need to be coordinated for cash flow, investment and tax purposes.
  3. Setting up a Company Pension Plan for the employer and employees, providing for a tax-efficient way to extract wealth from company profits and help ensure that both the employer and employees maximize their wealth and are financially secure in retirement.
  4. Protecting your business. For example, if a Key Employee falls seriously ill, or were to pass away, Key Person (Business) Insurance would compensate a company for the financial loss by providing a lump sum to to cover the business as a result. This would help minimize interruption to business activity by providing resources to find a suitable replacement for the employee.

 

Selling a Business:

Selling a business reshuffles your assets and probably changes your income. Both outcomes affect how you should manage money and investments going forward. A Financial Advisor will help you to establish a business succession plan, set up buy-sell agreements or put a disaster recovery strategy in place.

 

Getting a New Job or a Promotion:

An increase in income unlocks more money to pursue your financial goals. You may need guidance on how to invest that extra income efficiently. When moving to a new job, many employees forget about the benefits they have built up with previous employees over the many years, such as Pension benefits. A Financial Advisor will help you to access those benefits that you are entitled to, and provide you with pension investment options that would best suit your needs (based on your attitude to risk). For more on this: Pension Options when Moving Jobs >>

 

 

2. When Finances Grow with Complexity

 

Finances naturally get more complicated over time, even without big life events or changes. As you get older you take on more responsibility, and you may start finding it increasingly difficult to manage it all. Financial advisors are particularly useful in this scenario. A good advisor will take a comprehensive view of your assets and identify strategies to optimize your investment returns (while managing your risk), making use of strategies to reduce ongoing tax, and ensuring you are protected for unforeseen events.

 

 

3. Lack of Time or Expertise

 

Managing your money and investment can be like a second job, one that you don’t have time for. If you don’t have time for research and monitoring your portfolio. Here, a Financial Advisor can come in handy by taking over the tedious work and getting you involved when its time to make decisions. Similarly, you might not feel comfortable making investing decisions. You can get the support you need to make solid decisions and the education needed for best practices in money management.

 

 


 

Outcomes of working with a Financial Advisor

 

1. Wealth: Advised clients build more wealth and have greater net worth over time.

2. Reduce Complexity: An Advisor manages complex financial information on your behalf and highlights what matters most to you.

3. Achieve your Goals: An Advisor can help you take decisive action, and in turn, making you more successful at achieving meaningful goals.

4. Encouragement: A Financial Advisor can provide emotional support during difficult financial challenges, much like a Councillor.

5. Retirement Savings: Clients who work with Advisors are far more likely to have sufficient savings at retirement.

6. Confidence: Financial plans and advice will keep you better informed when making financial decisions and will leave you more confident in your financial future.

 

 

Conclusion

 

We know that clients not only value advice, they also appreciate added value. This is something Financial Advisors & Brokers can offer, with a holistic approach, when identifying and meeting client financial needs. If you need advice or have any queries, feel free to leave your details below, or pop into us for a coffee and a chat.

 

 

Where to find us

 

Locally:

If you are looking for a Financial Advisor near you, you can locate us at the famous Walkinstown Roundabout in Dublin 12.

Address: Greenhills Centre, Units 1 & 2, Greenhills Rd, Walkinstown, Dublin 12, D12 YH22.

 

Nationally:

If you are based outside of Dublin, we have Financial Advisors located in Co. Wicklow and Co. Cork (Munster), who would be happy to commute to you.

 

Click on the map below for directions to our offices…

 

 

Financial Advisor near me

 

Need to speak to a Financial Advisor?

Fill out your details and enquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

 

Financial Advisor Myths

 

Financial Advisor Myths

 

There are a many Financial Advisor myths out there that may prevent you from working with one. These may either come from your self-perceived viewpoint (how you personally feel about Financial Advisors given your own interpretation or impression of them), or a misconception based on external factors such as things you have heard from a close friend who maybe had a bad experience, or that it is better to go at it alone, or maybe that you would prefer a stranger not to handle your hard-earned money.

 

This would no doubt leave you feeling hesitant about working with a Financial Advisor, but remember, a good Financial Advisor’s objective is help you financially, to understand your needs and put together strategies to help you reach your financial needs and goals.

 

Nowadays trust is also hard to come by, and because trust is usually earned over time, we thought we’d debunk a few financial advisor myths to help you earn our trust to hopefully change your mind and leave you feeling more confident in engaging with a Financial Advisor.

 

 

 

Myth #1: I need a lot of money to work with a Financial Advisor

 

Fact: This is not necessarily true. A Financial Advisor can still work with you even if you don’t have many assets. Although your choices may be limited, you can still be assisted on a fee-based/hourly basis with things like budgeting, financial planning, help you set up a monthly Savings Plan and assist with ongoing monitoring and management, understand a workplace retirement plan and assistance with your pension options when moving from job to job.

 

 

Myth #2: A Financial Advisor will put all my money into risky stocks

 

Fact: A good Financial Advisor will never just throw all your money into stocks alone. A good Advisor will always assess your attitude to risk first to determine your risk profile and then make sure that your investment strategy aligns with your long-term goals and objectives. When constructing a portfolio, asset class diversification (Equities, Bonds, Property, etc) is key to smoothing out your returns as one asset class may perform differently to another under certain market conditions, therefore, effectively managing investment risk.

 

 

Myth #3: I need an Advisor local to me to meet in the office

 

Fact: Modern technology makes it convenient and easily accessible for clients to communicate with Financial Advisors through the likes of Zoom (video calling), email, and web applications to assist with filling out and signing e-documents. This is especially true for Financial Advisors like us, who have clients all over the country. This actually works in favour of clients as they need not spend €100 on petrol driving hundreds of kilometers and use up 3 hours of their own precious personal time.

 

 

Myth #4: A Financial Advisor is too expensive

 

Fact: Financial Advisors usually charge an initial commission, an ongoing (trail) commission, or a combination of the two. It really depends on your needs, the product/service and what you are looking to achieve. When it comes to crafting a Financial Plan, Advisors can charge a financial planning fee based on hours of work put in. Here, if its a case of the client signing up for a product to support the plan (i.e., a Pension as part of a retirement plan), the Advisor can decide to waive the financial planning fee and instead be remunerated by the product provider.

 

That being said, an honest Financial Advisor who acts with integrity in all their dealings should never take fees or commission where it is not due. A good Financial Advisor will also be worth more than the fees they charge, and do their best to make it affordable for you. As mentioned in the Vanguard report, with the help of Financial Advisors, investors gained around 3% per year in value for their investments over time, compared to what they would have gotten if they had not used an advisor.

 

 

Myth #5: I have no need for a Financial Advisor – I can do it all myself

 

Fact: Yes, there are many people that are certainly capable looking after their own finances, however, research by Royal London showed most people feel more confident about money and financially better off when they do get advice. Additionally, like many professions, Financial Advisors make use of a full suite a tools, and informational sources to serve clients effectively and provide positive outcomes in their money trajectory for the future.

 

 

Myth #6: I don’t trust handing my money over to a Financial Advisor

 

Fact: Simply put, a Financial Advisor will never have access to your funds. You are in control of your money at all times. An Advisor, in this case, can only recommend or advise you where put your money.

 

For example, say you want to invest a lump sum of €10,000, and the Advisor recommends investing your money in Zurich’s XYZ fund. Zurich as the custodian (financial institution responsible for holding your money) will create an account in your name for which you can have access to and manage online. The Financial Advisor is your point of contact but does not hold your money – you are in control!

 

 

Outcomes of working with a Financial Advisor

 

1. Wealth: Advised clients build more wealth and have greater net worth over time.

2. Achieve your Goals: Those who work with Advisors are more successful at achieving meaningful goals.

3. Retirement Savings: Clients who work with Advisors are far more likely to have sufficient savings at retirement.

4. Confidence: Financial plans and advice will keep you better informed when making financial decisions and will leave you more confident in your financial future.

 

 

Where to find us

 

Locally:

If you are looking for a Financial Advisor near you, you can locate us at the famous Walkinstown Roundabout in Dublin 12.

Address: Greenhills Centre, Units 1 & 2, Greenhills Rd, Walkinstown, Dublin 12, D12 YH22.

 

Nationally:

If you are based outside of Dublin, we have Financial Advisors located in Co. Wicklow and Co. Cork (Munster), who would be happy to commute to you.

 

Click on the map below for directions to our offices…

 

Financial Advisor near me

 

 

Need to speak to a Financial Advisor?

Fill out your details and enquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

Do I need a Financial Advisor?

Do I need Financial Advice?

 

When people think of what financial advice is, they sometimes associate a Financial Advisor as a person who simply picks the best investments for them, or how much greater an investment return they can make for clients with fund A over fund B. A Financial Advisor offers much more than this. An advisor’s mission is to close the gap between where you are financially and where you’d like to be.

 

For example, a Financial Advisor can provide valuable insight for how you should be managing your money to reach your financial goals at every crucial life stage, be it, buying your dream home, getting married, planning for children, advice when changing jobs, moving up in the workplace or starting your own business, and reaching your retirement goals. This in turn will help you make smarter decisions and avoid making expensive mistakes in life.

 

In addition, Vanguard released a research paper titled “Putting a value on your value: Quantifying Advisor’s Alpha” outlining the value-add, or alpha, through ongoing guidance, discipline, financial planning and relationship based approaches between the client and advisor. The findings reflected that with the help of Financial Advisors, investors gained around 3% per year in value for their investments over time, compared to what they would get if they had not used an advisor.

 

 

What is the value of a Financial Advisor?

 

The above is often supported by some of the below techniques that Financial Advisors use to help ensure that clients getting the most out of their investments or financial plans.

 

Cost Management:

One of the first questions that our Financial Advisors get asks on our first interaction with clients is, no doubt, “how much do you charge?” Notably, this is an important concern for clients and so fees and charges are always disclosed from the outset. Where we can, we help to reduce charges for clients as this makes a huge difference to their investments over time given that the slightest reduction could mean significantly higher investment return over a period of 10 years plus.

 

What is the value of a Financial Advisor

Portfolio Rebalancing:

There are also important benefits of working with a Financial Advisor that you wouldn’t otherwise get going at it alone, such as compiling the right mix of asset allocation in your portfolio (equities, bonds, property, etc) in line with prevailing market conditions. Here, portfolio rebalancing is key to ensure the client gets optimal investment returns during a certain period by taking profits from certain investments and topping others when required.

 

Assess your Attitude to Risk:

When engaging with clients, a Financial Advisor needs to listen, ask questions and really understand what clients are aiming to achieve. Sometimes this can be something quite simple, other times a more holistic financial strategy, nonetheless, a Financial Advisor will always assess your attitude to risk to make sure you are comfortable with the level of risk you would need to take on to achieve your investment objectives.

 

Behavioural Coaching:

Research suggests that behavioural coaching is the most valuable tool used by the Financial Advisor to help clients to “stay the course” of their investments and avoid knee-jerk responses to volatile market conditions. Investors commonly make the mistake of “selling low” when markets dip as a result of fear, and thereafter “buying high” when the markets begin to improve again as a result of greed. This can cost the investor dearly, and so we also advise to avoid market watching, stick to your annual financial review, and remain committed to your long-term investment strategy and objective.

 

The Vanguard report, as discussed above, suggested that funds under-performed by 3% due to poor decision making, and alternatively, with solid behavioural coaching, investors added 1.5% per year to their fund performance over and above advisor fees.

 

Financial Resilience & Security:

Financial education and advice is key to achieving financial resilience as you go through life. Here, a Financial Advisor can assist by helping you to withstand challenging life events that could impact your income and assets. Some of these financially stressful events can include the following; Unemployment, divorce, disability, income and health problems. Working alongside a Financial Advisor will help you to build financial resilience, have a more financially focused mindset, and achieve financial security.

 

 

Emotional Benefits & Well-being:

 

A recent published report by Royal London Group found that the top three emotional benefits of consumers getting financial advice are:

  1. Feeling more confident in their financial plans
  2. Feeling more in control of their finances
  3. Having peace of mindFinancial Advice is essential

In addition, the top three emotional qualities that customers value when it comes to a Financial Broker are:

  1. Quality of the advice and expertise
  2. Trustworthiness
  3. Communication

 

Outcomes of working with a Financial Advisor

 

1. Wealth: Advised clients build more wealth and have greater net worth over time.

2. Achieve your Goals: Those who work with Advisors are more successful at achieving meaningful goals.

3. Retirement Savings: Clients who work with Advisors are far more likely to have sufficient savings at retirement.

4. Confidence: Financial plans and advice will keep you better informed when making financial decisions and will leave you more confident in your financial future.

 

 

Where to find us

 

Locally:

If you are looking for a Financial Advisor near you, you can locate us at the famous Walkinstown Roundabout in Dublin 12.

Address: Greenhills Centre, Units 1 & 2, Greenhills Rd, Walkinstown, Dublin 12, D12 YH22.

 

Nationally:

If you are based outside of Dublin, we have Financial Advisors located in Co. Wicklow and Co. Cork (Munster), who would be happy to commute to you.

 

Click on the map below for directions to our offices…

 

 

Financial Advisor near me

 

 

Need to speak to a Financial Advisor?

Fill out your details and enquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

Income Protection Insurance

 

What is Income Protection Insurance?

 

Would you be able to replace your income if you were unable to work due to an accident or serious illness

Income protection insurance is an insurance policy that pays out a regular cash payment (each month) that replaces part of your lost income if you are unable to work due to a medium to long-term illness or disability (It does not cover redundancy). It must also not be confused with private health insurance.

 

To qualify for this insurance, you must be in full-time paid work or be self employed. Cover can be obtained between age 18 and 59, and can reach age 70 with certain insurers. 

 

Deferred Period:

Not everyone needs their income to start paying as soon as they are out of work. You can choose when your replacement income starts paying out. So if your employer pays you sick pay, you may only want your money to kick in after that.

 

The period in between your work ceasing and when the insurer starts paying you in known as the ‘deferred period’. You can choose how long you wish to delay the payment. It can be 1, 2, 3, 6 or 12 months (or 4, 8, 13, 26 or 52 weeks). The longer you wait, the lower your premiums will be.

 

 

Do I need Income Protection?

 

Consider this… You are put into a situation where an illness or injury stops you from working for a couple months or even years. You are trying to recover and get better, and in so doing you ask yourself, “where am I going to get the money to pay for my monthly expenses and commitments??”

 

Now sure, you may get some sick pay from your employer, or have some savings in the bank, however, that probably won’t nearly be enough to pay for expenses for medical treatments or pay off monthly bills such as your mortgage repayments, car insurance, utilities, weekly groceries, and children expenses & education (well let’s not go down that road…). Considering the weight of the above, you would indeed need sufficient income to support yourself and your family financially. Here, Income Protection has you covered!

 

You may also need income protection if you:

 

  1. Are self-employed and would have no source of income if you couldn’t work due to illness or disability.
  2. Have little or no sick pay from your employer.
  3. Have no ill-health pension protection.
  4. Have dependents who rely on your income.
  5. Have no other source of income.
  6. Do not have sufficient benefits to replace your lost income and/or cover your expenses.

 

When do people usually claim?

 

Aviva Claims Statistics: The main causes of Income Protection claims that were submitted in 2021 (by 2,000 claimants) were:

 

  1. Psychological – 25%
  2. Orthopedic – 25%
  3. Cancer – 20%
  4. Neurological – 7%
  5. Cardiac – 7%
  6. Other – 17%

People usually claim when certain medical conditions negatively affect their ability to perform their role at work. These can include the development of psychological (depression & anxiety), orthopedic, and cancer-related conditions. The above can cause serious distress for a person experiencing any of these and so time off work is needed to focus on healing, recovery, and/or rehabilitation. 

 

 

How much cover can I get?

 

An Income Protection policy provides you with a replacement income of up to 75% of your annual salary before tax if you cannot work due to an illness or injury. Take into account that you would have to minus the state illness benefit that you are entitled to.

 

All insurers have a maximum annual limit on the amount you can claim, and is set at €250,000, with the exception of Aviva to which the maximum benefit is €262,500.

Tax benefits on contributions

 

For example:

If you earn €80,000 per year (gross annual income) and you would like to protect 75% of your income, this would reduce the amount to €60,000.

 

€60,000 minus the state illness benefit of €10,816* (€208 per week X 52 weeks) = €49,184.

 

So the amount of income you will be able to insure every year is €49,184, or €4,099 per month.

 

If you are self employed and earn €80,000, you would be able to claim the full 75% (€60,000) as you are not entitled to the state illness benefit, giving you €5,000 per month.

 

*The amount you can qualify for depends on your average weekly earnings for the relevant tax year (in this case, 2022).

 

 

How much does it cost?

 

The cost of your Income Protection premiums are determined by the below factors:

 

Age:

The older you get, the higher the premium. They also increase as you get older on the Reviewable plan. If you want to keep your premium the same (level) throughout your policy then it may be worthwhile considering the Guaranteed Protection plan. This is a more expensive premium at first but usually cheaper over the long run.

 

Job Status:

Some jobs a higher risk than others. Class 1 jobs are lower risk and so allow for lower premiums. With jobs that fall within Classes 2, 3 and 4 usually pay a higher premium given that there would be more factors on the job.

Examples:

  1. Class 1: Accountant, Solicitor, Computer Programmer
  2. Class 2: Hairdresser, Dentist, Bookmaker
  3. Class 3: Driving Instructor, Social Worker, Locksmith
  4. Class 4: Plumber, Garage Mechanic

 

Smoking Status:

If you smoke, your premiums will be higher than if  you are a non-smoker. If you have smoked tobacco products in the last 12 months, you are considered a smoker. 

 

Medical History / Pre-existing Conditions:

When applying for protection, you will be asked questions about your health. If you have a condition that carries a level of risk, you may need to pay a higher premium or have an exclusion added to your policy. 

 

Indexation:

If you would like your cover to increase annually alongside inflation, this will also increase your premiums each year (usually by 3.5%).

 

Amount of Cover:

Simply put, the higher the cover, the more you pay. Your income and the percentage of cover will have an affect on the cost.

 

Deferred Period:

When you claim, the longer you delay/defer your payment the less you will pay (as mentioned above).

 

When applying for cover it is important that you answer the above questions honestly and as accurate as possible. If you should happen to claim from your policy and there is information that you did not disclose when applying, you may not receive any payout.

 

 

Additional Benefits of Income Protection

Income Protection

 

Many of the following benefits that come standard with one provider may have an extra charge with another provider – so its important to always use a broker to compare quotes across the market. The following can be included:

 

Specified Illness Benefit:

If this benefit is included in your plan it allows you to claim a once off lump sum if you are diagnosed with a specified illness listed in the policy.

 

Life Cover Benefit:

Certain plans can provide you with a lump sum payment in the event of your death. This would be an additional benefit for family members who would need to continue paying bills, mortgage repayments, or funeral costs, and so providing relief through a challenging time.

 

Terminal Illness Benefit:

If you are diagnosed with a Terminal Illness and you have less than 12 months to live, your payments will start immediately.

 

Continuation Option / Job Change:

If you move jobs or become self-employed within the term of the plan you will have the option to continue your policy without any underwriting (showing new medical evidence).

 

Guaranteed Premium:

Insurers offer guaranteed premiums on the plan. Once the policy is accepted, your premium remains at the same level throughout the plan.

 

Guaranteed Increase Option: 

This provides the opportunity to increase (top up) your cover at specific intervals without additional underwriting (further questions about your health, job, etc). The increase applies to the original cover amount each time.

 

Waiver of Premium:

This benefit allows you to pause your monthly premiums while making a claim on your policy. You would thereafter continue paying your premiums when you return to work.

 

Back to work Benefit:

This benefit provides extra support after a set period when you return full time after being off for a qualifying period, e.g., over 12 months.

 

Partial Payment:

This provides you with a partial benefit if you return to work part time or on a lower income due to a disability or illness, thereby bridging the gap in your earnings. 

 

Hospital Cash Benefit:

This provides a daily replacement income if your are hospitalized during the deferred period.

 

Rehabilitation & Guidance:

 

Insurers like Zurich and Aviva are really stepping up their game in an effort to ensure that clients who are covered under their plans are well looked after and are in need of medical advice, assistance, and counselling.

 

Zurich:

Under Zurich protection plans, clients have access to a team of rehabilitation nurses who will go to meet you in your home and help put a plan in place to get you back to work. They also fund the costs of treatment with local physiotherapists or psychologists/counsellors which they can arrange in conjunction with your own GP, or pay for a specialist doctors visit to help you to avoid a long waiting list and get better quicker.

 

Aviva:

Aviva include a number of different benefits under their plans at no extra cost including the following:

 

  1. Best Doctors Second Medical Opinion – If you are faced with a medical problem, and you need guidance on your diagnosis or treatment, this service provides a second medical opinion from a panel of 50,000 world-renowned experts to ensure that you are diagnosis is in fact accurate. This can certainly offer peace of mind given the stress of going through a medical challenge.
  2. Aviva Family Care Mental Health Support – This is their counselling and psychotherapy service for people who are struggling with a bereavement, overwhelmed, stressed or anxious, feeling down, depressed or lonely, and are in need of help managing the emotional impact of life events, etc. Their Mental Health Support service offers quick access to tailored mental health advice from qualified psychologists.

 

 

Income Protection for the Self Employed

 

Personal Income Protection is for the self employed or those who are in a job that doesn’t provide an income protection plan and want to set up a policy independently of their employer.

 

This will pay out a regular cash payment that replaces part of your lost income if you cannot work due to a medium to long-term illness or disability.

 

Tax Relief:

With Personal Income Protection you can get tax relief at your marginal rate on the premiums you pay. 

 

Claiming tax relief is really important as it reduces the cost to you by the rate you pay tax at – so either 20% or 40%. For example, if you are a higher rate tax payer, a monthly premium of €50 would effectively only cost you €30 as you would claim tax relief at 40%.

 

 

Income Protection for Company Directors

 

Executive Income Protection is a cost-effective solution that allows employers to provide income security for company directors in the event of an unforeseen illness or injury in their business.

 

This plan works similarly to an ordinary income protection policy offering a replacement income, only difference being, the executive income protection is taken out and paid for by the business on behalf of the Director or employee. In the event of a claim, the benefit is paid directly to the company who continues to pay the employee or director through PAYE whilst they are unable to work.

 

Protected Pension Contributions:

In addition, the Income Protection plan can also allow for the cost of pension contributions to be covered. Contributions can be protected up to 33% of salary to a maximum of €50,000. The policy will also ensure employer pension contributions are maintained whilst claiming on the policy. 

 

In the event of an insurance claim, the insurance company will pay your benefit directly to you, after tax, USC and any other relevant deductions.

 

Tax Relief:

The premiums that are paid for by the employer qualify as an allowable business expense that can be offset against corporation tax.

 

If you need to claim, the insurer will pay the income benefit to the employer, who passes it onto the employee through salary, making any relevant tax and USC deductions. With a tax deductible premiums, you will continue to be paid while you’re unable to work. 

 

 

Why do I need a Financial Advisor?

Contact us for Financial Advice

 

Compare the Market:

Save time and the stress of guessing who the best insurer is. We quote all providers across the market to ensure you have a plan that is best suited to your particular needs.

 

Policy Review:

If you have a current plan, we can review your benefits to see if you are getting the most out of your plan.

 

Save you Money:

We could help you to reduce the cost of your premium. For example, if you have stopped smoking for the last 12 months you could get a premium discount of up to 50% off your current premium.

 

 

Need assistance, or a Quote?

Fill out your details and inquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

 

DD/MM/YYYY
e.g. €40,000
Select 'Smoker' if you have smoked tobacco products in the last 12 months.
Any additional comments?

Turning Company Profits into Personal Wealth

Turning Company Profits into Personal Wealth

Executive Pension arrangements are perhaps the most tax efficient way of providing pension benefits for Company Directors, key employees, and family members employed in the business.

 

If your business is doing well and generating healthy profits, now may be the time to start extracting it from your business!

 

As a Company Director or spouse employed in the business, one of the most attractive and tax-efficient ways to extract profits from the company and turn them into personal long-term wealth is by way of transferring those profits into a company pension.

 

Where the company has excess profits which the company directors wish to transfer into a company pension, it is often more tax efficient for the employer to make an employer pension contribution to an Executive Pension. The advantage here is to avoid a personal tax liability for the member which would be the case when using other profit extraction methods such as increasing salary/bonuses or taking share dividends.

 

Conventional extraction methods will cost you more:

You may decide to take profits from your company in the more conventional ways, but these will just leave you paying more tax:

 

  1. If you take it by way of salary, you may have to pay income tax at up to 40%, USC up to 8% and PRSI up to 4%.
  2. If you take it as dividends, you would pay tax at up to 40%.
  3. If you use the money to buy a car for yourself, you pay Benefit in Kind at up to 30%.
  4. If you sell your company, you pay Capital Gains Tax at 33%.
  5. In the event of death, Capital Acquisitions Tax at up to 33% applies.

Therefore, by transferring your profits into a Company/Executive Pension you can reduce the above forms of personal tax liability.

 

 

Tax Advantages of a Company Pension Scheme

 

 

Transfer Profits into Pension | How does Max Funding work?

 

Employer contributions are not restricted by age related limits unlike member/employee contributions, but instead are related to the cost of providing retirement benefits based on “two thirds” of salary (where there is at least 10 years service at retirement). This can result in very generous contribution amounts.

 

Contributions are allowable as either Ordinary Annual Contribution or Special Contributions. The maximum allowable ordinary annual contributions to a scheme include all Employer, Employee and Additional Voluntary Contributions (AVC’s) made to the scheme in the company accounting period.

 

It is worth noting that it is possible to pay an Ordinary Annual Contribution by either regular monthly, quarterly or annual payment or by way of single premium. Special Contributions are normally paid by single premium and can be used to backdate periods of salaried service which were previously not pensioned.

 

The below information is needed to calculate the maximum contribution that would benefit you on a tax efficient basis when funded by the company:

 

  1. Age
  2. Salary
  3. Gender
  4. Marital status
  5. Chosen retirement age
  6. Date that salaried service commenced & potential service
  7. Value of pension benefits relating to previous & current employments

 

 

Ordinary Annual Contribution Calculation

 

Emma is 35 and married and has a salary of €50,000. She has a Personal Pension currently valued at €100,000. She has no definitive plan for a retirement date but wants to maximize pension contributions now to the best arrangement available.

 

The Revenue limits around personal contributions mean that the maximum personal contribution she could make to a pension would be €10,000 (20% x €50,000).

 

However in Emma’s case, her salary comes from her company. As a result the company itself can make contributions to an Executive Pension arrangement on Emma’s behalf.

 

Turning Company Profits into Personal Wealth

 

As you can see the company can make a far greater contribution on Emma’s behalf than Emma could make personally under the personal age related limits. For the purpose of the calculation we have assumed Emma’s NRA to be age 60 as she has no specified retirement date and wishes to maximize contributions.

 

 

Special Contribution Calculation

 

There is also the potential for companies to make pension contributions on behalf of employees for previously unfunded service with the company. These contributions are known as Special Contributions.

 

James is 50 and has his own company from which he takes a salary of €40,000. James set up his company fifteen years ago, taking a salary for each of these years but has no previous pension funding in place. James wishes to retire at age 60.

 

Turning Company Profits into Personal Wealth

 

As you can see the company can make a far greater contribution on James’s behalf in respect of previous service than James could make personally under the age related limits. The employer could immediately make a very large Special Contribution for James from the outset.

 

Revenue limits around personal pension contributions does allow backdating where prior to the 31st October in the current year, James could make a contribution and offset against last years income tax bill but limited to age and earnings attained in the previous year. Assuming earnings were the same this would equate to 25% of €40,000 or €10,000.

 

However, Revenue also allows that contributions may be made in respect of previous service by an employer using an Executive Pension arrangement. The calculation is based on the member’s current salary and all previous years with the company where they took a salary. This can be particularly beneficial for late starters to pension funding.

 

 

Tax Relief through Employer Contributions

 

Tax relief may always be attained on Ordinary Annual Contributions in the year in which they are made. Tax Relief on Special Contributions can also always be attained in the year in which the contribution is made where the Special Contribution is equal to or less than the corresponding ordinary Annual Contribution made in the same year.

 

A huge plus is that those who invest in a company pension plan enjoy benefits such as:

  1. No Benefit-in-kind on employer contributions.
  2. Immediate income tax relief on AVCs and employee contributions deducted from salary.
  3. Corporation tax relief on employer contributions in the year the contribution is made at the rate of corporation tax which is currently 12.5%.
  4. No employer PRSI is paid on employer pension contributions to an occupational pension scheme.

There are further tax advantages as any contribution made is invested in a pension fund which enjoys tax-free investment growth with no DIRT, Exit Tax or Capital Gains Tax applicable to any investment return achieved by the contribution.

 

 

Retirement Relief

 

At retirement, Directors will be entitled to a Retirement Lump Sum, some or all of which may be tax free.

The balance of the fund can then be used to:

 

  1. Purchase an annuity which will provide a guaranteed pension income for life.
  2. Invest into an Approved Retirement Fund (ARF).
  3. Take as taxed cash, subject to certain restrictions.

Pension income in retirement and withdrawals from ARFs are subject to income tax, Universal Social Charge (USC) and PRSI (if applicable).

 

 

How do I get started?

Contact us for Financial Advice

 

The rules governing overall contributions to Executive Pensions can be complex.

We recommend that you seek advice from one of our Financial Advisors first to make sure the company pension is set up correctly, and to maximize the overall contributions and tax-efficiency.

 

Need some assistance?

Fill out your details and enquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

 

Pension Auto-Enrolment

What is Pension Auto-Enrolment?

 

Pension Auto-Enrolment (AE) is a new savings and investment scheme for employees where financial returns are paid out to participants on retirement, in addition to the State Pension. It is being set up as not enough people have occupational or supplementary pension coverage to help maintain a reasonable standard of living in retirement above the level of the State Pension.

 

The proposed Irish Auto-enrolment system is designed to simplify the pensions decision for workers and make it easier for employers to offer a workplace pension. According to the Central Statistics Office’s Pension Coverage Survey 2021, the rate of supplementary pension coverage is around 66% of Ireland’s working population (outside of the State pension), and this could be as low as 35% in the private sector.

 

How will the Auto-Enrolment system work?

 

The auto-enrolment system is scheduled to go live from 1 January 2024, and will apply to approximately 750,000 employees who are aged between 23 and 60, earning over €20,000 across employments, and who are not already enrolled in an occupational pension scheme. Eligible employees will be automatically enrolled in the scheme but will have the choice after six months of participation to ‘opt-out’ or suspend participation. Those who opt out will be automatically re-enrolled after two years.

 

The Government as the new Central Processing Authority (CPA) will be responsible for, amongst other things, contribution collection, compliance, the allocation of pooled contributions to registered providers (RPs), the allocation of pooled investment returns to participants, and the overall administration of the auto-enrolment system.

 

How much will it cost?

 

The level of required auto-enrolment contributions will be gradually phased in over a decade. Contributions will be paid by employees, and matched by their employers with both employer and employee contributions starting at 1.5% of Gross Earnings and increasing every three years by 1.5% until they eventually reach 6% by Year 10 (2034). The State will top-up the rest. When allowance is made for the proposed Government top-up, this will lead to a total contribution being paid to a member’s pension account of 14% of Gross Earnings from 2034 (6% employee, 6% employer, 2% Government top-up).

 

The rates and time-frame are summarised as per below:

 

Phased Contributions

 

Employer contributions and the State top-up will be capped at a maximum €80,000 of an employee’s gross salary. Employees may contribute on earnings greater than €80,000 if they wish.

 

What the State Tax Incentive offers

 

Under the proposed auto-enrolment system the Government plans to operate a new incentive system to encourage pension savings by topping up member contributions. As outlined above the Government will contribute €1 for every €3 of member contributions.

 

Auto-enrolment will not replace tax relief available for private supplementary pensions. The Government has confirmed that the new system will run alongside the existing tax relief system available to pension savers participating in occupational pension schemes, PRSA and Personal pension products whereby individuals receive marginal income tax relief at either 20% or 40% (up to certain contribution limits) on their pension contributions.

 

The cost per €1 to member summarised below:

 

State Contribution under Auto-Enrolment

 

 

Investment Fund Options

 

The CPA will assign four commercial investment companies to become Registered Providers (RP’s) for the CPA. The role of the RP’s will be to provide investment options and act as investment managers for auto-enrolment contributions. They will invest contributions on behalf of individual participants and will be required to offer four fund types: 1. Conservative, 2. Moderate risk, 3. Higher risk, and 4. Default (The default option is required for people who do not nominate a preferred fund type and is a key element in a successful auto-enrolment system).

 

Should I wait for Auto-Enrolment?

 

Auto-enrolment is seen as a viable solution to address the lower pension coverage in Ireland, and could encourage people to be more financially aware of the importance of saving for their retirement. Although a positive move by government, there are many reasons why you should not wait for auto-enrolment and consider setting up a pension scheme for yourself and/or your employees now.

 

As outlined above, the auto-enrolment state tax incentives are less generous than the current tax relief incentives available for higher rate taxpayers.

Here’s why you should consider setting up your own Private Pension now:

 

  1. With a Private Pension, you can get up to 40% tax relief on your personal contributions now. For example, under existing rules if you contribute €1,000pm, and are on the higher rate of income tax, then you will receive tax relief of €400pm, meaning that your contributions of €1,000pm will only cost you €600pm. Under auto-enrolment the State will pay €1 to every €3 saved i.e. your contribution would be €667pm and the State’s contributions is €333pm. Please note that limits apply to the above.
  2. There is a wide range of excellent performing funds of different risk levels across the various pension providers, however, under the current auto-enrolment proposal, there is only a choice of 4 funds to choose from which can potentially limit your pension growth and flexibility.
  3. Auto-enrolment presents a risk that individuals will take a backseat and leave their contributions at the minimum contribution level which may not be adequate to sustain their current or desired lifestyle in retirement.

 

In order to secure your financial future, starting a pension is one of the smartest financial decisions you can make. When choosing a pension, having all the information you need is key.

 

Therefore, sound advice by a Qualified Financial Advisor is invaluable. Our Advisors can guide you through the process and help you select the right plan for your circumstances.

 

All of us have different goals for our retirement and this is why it would make sense to take personal control of your pension and retirement planning – to have access to all of the investment options available to you alongside a tailored strategy to help you get there.

 

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