I’m New to Pensions!
While you’re working, you probably don’t think too much about your retirement – except maybe how nice it would be to enjoy all that free time. But unless you plan for your retirement during your working years, you may not be able to enjoy a comfortable lifestyle in retirement.
While your retirement may seem like a long way off, the sooner you start saving for it the better. Putting a little away now can make a big difference later on. And don’t forget that you can avail of very attractive tax relief on contributions you make into your pension.
I have a Pension!
If you’ve already started your pension, you need to review it each year to ensure your retirement plans remain on track. If you are saving for retirement through your company pension plan, it’s important to make sure that you’re saving enough to provide you with lifestyle that you want in retirement. Employees in a company pension plan can boost their pension savings to provide a greater income in retirement through Additional Voluntary Contributions (AVCs).
If you don’t have access to a company pension plan then one of the best ways to save for your retirement is by taking out a Personal Retirement Savings Account (PRSA). A PRSA is a cost efficient pension plan that anyone can take out to build up a fund for retirement.
One of the best things about saving into a pension is the generous tax relief available, up to 40%* for a higher rate tax payer.
*It is important to note that tax relief is not automatically guaranteed; you must apply to and satisfy Revenue requirements. Revenue limits, terms and conditions apply.
I’m a Public Sector Employee!
As a member of a Public Sector Plan you may have a number of options available to you to maximise your pension benefits at retirement while making the most of the tax advantages of retirement planning. Additional Voluntary Contribution (AVC) plans can be used to enhance your benefits and options at retirement.
It is important to consider whether you can purchase ‘added years’ in respect of your membership of your Public Sector Pension Scheme. Further information can be obtained from your HR Dept.
Remember if you are a PAYE worker, you may be able to make a contribution to your pension before 31st October and claim tax back for 2015.
I’m fast approaching Retirement!
Your retirement is a time you have worked hard for. To ensure you are able to make the most of your retirement you will want to ensure you are financially independent. Especially since your retirement could last for 20 years or more.
You now have an important financial decision to make regarding your pension fund and how it could be best used to meet you and your family’s needs in the future.
Two of the most important factors you should consider are the way in which you wish to use your pension fund to provide an income in retirement and whether you wish to pass the balance of your fund to your dependants after your death.
What you can do with the proceeds of your pension plan depends on which employment category you fall into and the type of pension plans you currently hold. Depending on your circumstances there are different options for you to consider at retirement.
Most people will choose to take the very attractive tax-free retirement lump sum option of up to €200,000 from their pension fund (subject to Revenue rules) and then use the balance to meet their financial needs in retirement through one of three further retirement options:
1. Purchasing a pension income for life (also known as an Annuity),
2. Investing in an Approved Retirement Fund (ARF) or,
3. Taking a taxable lump sum
If you’d like more information on Pensions, or indeed any financial advice, why not contact us at info@mkfinancial.ie
Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland
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