Why should I start a pension?

A pension is a smarter way to save.

If you like saving money but hate paying tax, you will love retirement savings. Unlike a deposit account where you pay DIRT on any growth, with a pension you can actually claim tax back!

• Tax relief available on contributions

• Tax free growth on your pension fund

• Regular income in retirement, potentially income tax free

Your income could drop by up to 66% in retirement.

When you retire, you’ll probably expect to maintain the same standard of living. However, unless you put a retirement plan in place, your income could drop by nearly 66% when you retire. The State

Pension Contributory is €12,132*, but the average industrial wage is €35,874**.

You need to save for your retirement to help avoid a big drop in income.

* Source: Weekly State Pension Contributory 2016, www.welfare.ie.

** Source: CSO, Average weekly Industrial Wage, Earning and Labour Costs, 31 March 2014.

You may need an income for up to 30 years or more when you retire.

You may be retired for up to a third of your life and that’s why it’s so important to have a savings plan that ensures that the money you earn during your working life lasts your whole life.

It can provide you with the security of a regular income to ensure a comfortable standard of living for your retirement.

Your retirement could amount to as much as a third of your life so it makes sense to save now so that you can relax and enjoy this time.

If you do qualify for the State Pension, you could be 68 before you receive it.

The age of eligibility for the State Pension (Contributory) has changed and no longer starts at age 65.

That’s potentially a three year gap in retirement income!

• If you were born on or after 1 January 1955 the minimum qualifying State Pension age will be 67

• If you were born on or after 1 January 1961 the minimum qualifying State Pension age will be 68

Don’t delay, talk to MK Financial today!

Call us on 086 8440541 or email info@mkfinancial.ie        

Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland

Review your pension BEFORE the tax deadline!

Calling all Employees and Self Employed Individuals

If you are an employee or are self-employed, then you have a once off opportunity to maximise your tax savings and increase your pension contributions. But you must act now!

The Opportunity

You may be able to make a once off, lump sum payment into your pension before the tax deadline of October 31st and offset it against last year’s tax bill. This will allow you to increase your retirement savings and save tax!

Save Tax and Increase Your Pension Contributions in 3 Easy Steps

1.       Check out the Revenue limits table below or contact your local tax office, to ensure you are entitled to claim tax relief on the extra amount you now wish to save for the 2015 tax year.

2.       Pay the amount you wish to save by October 31st, and you will then be issued with proof of

payment.  Payments must be received by the October 31st, so don’t delay!

3.       Contact your local Revenue office with proof of payment by October 31st, stating that this contribution has been paid against your 2015 income.

Save Tax
If you paid tax at 40% in 2015, then a €1000 investment into your pension now could only cost €600, as you could claim a refund of €400* from Revenue.	Tax Bands	40% Tax	20% Tax
	Gross Payment	€1,000	€1,000
	Tax Relief Available	-  €400	- €200
	Net Cost To You	€600	€800

Terms and conditions apply

* Revenue limits, terms and conditions apply. It is important to note that tax relief is not automatically granted, you must   apply to and satisfy the Revenue requirements. Your benefits at retirement may be subject to tax.

Revenue Limits
The maximum percentage of your salary/earnings that you can normally save into your pension each year and claim tax relief on, is shown in the table opposite. For example, if you are 35 years of age and already contributing 5% of gross earnings to your pension plan, you could be able to pay up to 15% extra as a lump sum now!	Age	Revenue Tax Relief Limits
	Under 30	15%
	30 – 39	20%
	40 – 49	25%
	50 – 54	30%
	55 – 59	35%
	60 & over	40%

Warning: The value of your investment may go down as well as up.

Warning: If you invest in this product you will not have access to your money until you retire.

Don’t delay, talk to MK Financial today!

Call us on 086 8440541 or email info@mkfinancial.ie        

Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland

Update 4th October - PROTECT YOU AND YOUR FAMILY

 If you earn an income, own a home, have a family, a business or an investment property, then protecting you and your family against the financial impact of ill-health, terminal illness or death is one of the most important decisions you can make.

 Having the facts to hand means you can make an informed decision on what life insurance you and your family need.

 

What should you be protecting?

We insure our home, our car, our holidays and sometimes even our family pets but the very thing we often overlook to insure is the most important of all, ourselves and our families.

Many people do not realise the financial impact that an unexpected serious illness, injury or premature death can have on a family. The unfortunate reality is that Irish families are struck by these events every day and the financial impact can be significant and long lasting.

You probably have mortgage protection to clear your mortgage and secure your home, but have you thought about how your family would cope with all the other outgoings each month if you got seriously ill or died prematurely?

Having a life insurance plan is an effective way of providing peace of mind knowing that should the worst happen, your loved ones will have the financial security they need at such a difficult time.

You can set up your life cover to pay a lump sum amount, a monthly income amount or both on a Single, Joint or Dual Life basis.

• Lump Sum on Death Benefit: this pays out a lump sum in the event of death, or in certain circumstances on diagnosis of a terminal illness, during the term of cover.

• Income on Death Benefit: this pays out a monthly income on death or, in certain circumstances on diagnosis of a terminal illness, for the remainder of the term of cover.

• Whole of Life Benefit: this pays out a lump sum of up to €50,000 on death. The difference with this benefit is that it will be paid out even if death occurs following the end of the term of cover for the main benefits. If, for example, your term of cover ends at age 65 for other benefits and you die at age 90, this benefit will still be paid out provided that you have paid all premiums when due.

What is the difference between single, dual and joint life insurance?

Single Life – Covers only one life insured.

Joint Life – A joint life insurance policy covers two lives and may provide for a payment in the event of death of the first or last life covered depending on the type of policy you have. For example:  Joint Life First Death cover will pay on the first claim for a benefit. The cover in respect of that benefit will then cease for other lives.

Dual Life – Covers two people independently. Dual cover could potentially pay out two separate payments for each benefit covered.  In the event of a claim by one of the lives insured, the cover on the other life insured will continue as before.

You can also protect your income (Income protection), your mortgage (Mortgage protection) or your assets (Business protection). 

If you’d like more information, please give Michael a call on 086 8440541 or email info@mkfinancial.ie.

Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland

Update 28th September - All about Pensions

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

YOU CAN’T PREDICT THE FUTURE BUT YOU CAN PLAN FOR IT

Protecting your income protects a lot more

WHAT IS INCOME PROTECTION?

Your income is probably your most important asset. It funds your whole lifestyle from what’s in your fridge to where you go on holidays. Your children depend on it from birth, right through to college and often beyond.

WHY DO YOU NEED IT?

An Income Protection plan pays you a monthly income if you are unable to work due to any illness, accident or injury. You can ensure you continue to meet your monthly mortgage repayments and household bills and maintain your current standard of living. It will continue to pay you an income until you are well enough to return to work, or if not, until your retirement age.

Income Protection can protect up to 75% of your earned income up to age 65.

The cost of the cover will never increase during the term of your plan (unless you chose to index it or apply to increase your cover)

ASK YOURSELF

• What would happen if your income suddenly stopped because of ill health?
• How long would your employer pay you if you were on prolonged sick leave?
• How would you and your family cope financially after that?

DID YOU KNOW?

Many employers don’t provide any form of sick pay and of those that do, many will only pay you for six months.

If you are self-employed you are not entitled to the State Illness Benefit if you are unable to work due to illness.

AFFORDABLE COVER

Income Protection is more competitive than you may think – the younger you start the less it will cost. And remember your premiums should be eligible for tax relief at your marginal rate of tax.

If you would like to talk about this or need any other financial advice, please call Michael on

086 8440541 or email info@mkfinancial.ie  to arrange an appointment.

Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland

Don’t forget - 31st October Tax Deadline!

An Opportunity to Reduce your 2015 Income Tax Bill

Individuals who both pay and file their tax returns through the Revenue On-line Service (ROS) have until Thursday 10th November 2016 to pay a pension contribution and elect to backdate the income tax relief against the 2015 tax year. Those who do not qualify for the ROS extension must do this by 31st October 2016.

How Much Can You Contribute to a Personal Pension, PRSA, PRSA AVC or AVC?

For contributions paid in 2016 and set against 2015 earnings, an earnings cap of €115,000 applies for tax relief purposes to total contributions to PRSAs, Personal Pensions and Employee / AVC contributions to Occupational Pension schemes.

Who Can Contribute?

·         The self-employed,

·         Proprietary Directors (those who own more than 15% of a company)

·         People with non-PAYE income

·         Employees

·         Directors

If you are already in an Occupational Pension Scheme you can also reduce your 2015 tax bill by making an AVC single premium on or before 31st October 2016.

Who can claim Income Tax Relief on AVCs or PRSA AVCs?

Income tax relief on AVCs or PRSA AVCs can be claimed by individuals who are:

·         Employees (Schedule E, PAYE and a member of a company pension scheme)

·         Directors of companies (Schedule E, PAYE and a member of a company pension scheme)

Examples of Schedule E income would include salary, bonuses and benefit-in-kind (BIK).

Where a client has changed employment this may affect their ability to make a pension contribution and backdate the tax relief to the previous year. Once a client leaves an employment where they were a member of a company pension scheme, they cannot make any further pension contributions in respect of the earnings from that employment.

Note: a termination payment made on leaving employment is not considered remuneration for pension purposes. This would include termination payments on redundancy, payment in lieu of notice and other ex-gratia payments. However, part or all of such a termination payment may qualify for tax relief under other available exemptions.

To check if you’re eligible to reduce your tax or receive a rebate for 2015, while helping to fund your pension, contact Michael on 086 8440541 or email info@mkfinancial.ie

Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland

Hot Topic #26 Negative Interest Rates – Where to now?

Central banks in Denmark, Sweden, Switzerland and Japan along with the ECB have adopted negative interest rates in a bid to further stimulate lending and boost economic growth. It is debatable as to how effective negative rates are in achieving these aims but central bankers have been credited with helping the world economy recover from the financial crisis and they continue to experiment with unconventional methods.

Negative rates are a drag on the retail banks' profitability as excess reserves put on deposit with the ECB attract a negative rate of 0.4%. The central banks want retail banks to lend this money instead of putting it on deposit with them. Retail banks argue that there isn't the demand.

The banks have, so far, resisted passing negative rates along to retail customers but there are signs that this could be changing: RBS recently sent letters to business customers highlighting a change to its terms & conditions and the possibility of negative deposit rates. A German co-op savings bank will pass on the 0.4% negative charge on deposits over €100,000 from September onwards. Bank of Ireland is to charge corporate and institutional customers on deposits of €10m or more while German insurer Munich Re is reported to have stored in excess of €10m in a vault as a way of avoiding negative rates.

One major problem the banks have with passing negative rates along to the general public is that they would likely see massive withdrawals as customers take their cash out of the banks rather than accept a negative rate. This is clearly easier for customers with smaller levels of savings than corporate customers with millions on deposit (where would Apple Inc. store its $200 billion cash pile?). This would create new problems for the banking system, not to mention the spike in crime that would accompany it.

One possible solution has been proposed: a cashless society. If cash was confined to the history books and all transactions involved a digital transfer through one method or another (plastic cards, phones, apps, etc) financial institutions could impose negative rates on customers and we wouldn't have much choice but to accept it (barter could make a comeback). It is unlikely to happen in the near future but we are heading towards a cashless society and all the pros and cons that go with that.

Most of us do not have to worry about negative interest rates for the moment but, if you have large cash deposits, you should consider diversifying across other asset classes.

Source:  David Coffey - Senior Portfolio Manager, Cantor Fitzgerald

Michael Keville T/A MK Financial is regulated by the Central Bank of Ireland