Pensions & Retirement
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 savings is one of the few areas where you can get substantial tax relief. For example, Pensions offer tax breaks and incentives, such as, tax relief on contributions where you could claim up to 40% tax relief on all your pension contributions (at your higher rate of income tax).
For most people, a pension scheme is likely the best way to supplement their current lifestyle and income in 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. 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.
4. 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.
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Personal Pension
A PPP is a long-term investment that aims to help you build up a pot of money.
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Personal Retirement Savings Account (PRSA)
Both the holder and their employer may make contributions into the PRSA.
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Personal Retirement Bond “PRB”
A PRB is a personal policy that is set up by trustees of a pension scheme to provide retirement benefits for a former member of the scheme.
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Approved Retirement Fund “ARF”
With ARFs, you re-invest your pension fund and take the money out when you need it.
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Annuity
An Annuity is a simple retirement payment option that guarantees to pay you a particular amount every month throughout your life in retirement.
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Additional Voluntary Contributions “AVCs”
Additional Voluntary Contributions, or AVCs, are extra contributions you can make in addition to your existing company pension.
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Executive Pension
An Executive Pension is designed to help Company Directors and Executives save for retirement and grow their wealth in a tax-efficient way.
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Company Pension Plans
Providing your employees with access to a Company Pension scheme is essential if they are to enjoy a comfortable life in retirement.
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Using your Pension Fund to buy Property
Using your Pension Fund to buy Property allows rental income to grow your pension fund while benefiting from generous tax reliefs.
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UK Pension Transfers
A Qualified Recognised Pension Scheme (QROPS) is a pension scheme that can receive a transfer of UK Pension Benefits free of tax.
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Self Employed Pension
This plan is ideal if you are a Self Employed business owner or sole trader looking to save for retirement.
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Pension Transfers
Pension Transfers are suitable if you move jobs and wish to take your pension benefits with you, or realize the various benefits of consolidating multiple pensions.
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.
The best pension option for you depends on your personal circumstances and work situation, which is why it is advisable that you speak to an Advisor first.
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