Pensions/ Retirement Planning:

Pension planning is designed to provide you with a supplementary income in retirement. If you do not provide for your own retirement you will be faced with a significant drop in income when you retire.

The current (contributory) state pension is a maximum of €230.30 per week for an individual but it can be reduced substantially if you are self employed or have not paid sufficient PRSI contributions. This equates to less the €12,000 per annum. For most people it is estimated that they will require between 50-75% of their average pre-retirement salary in retirement to maintain their standard of living. This is why it is nescessary to plan for your future and start your pension early.

So, if you want a reasonable standard of living you need to plan for your retirement. You can do this in a number of ways, such as:

• Saving money in a savings account
• Buying stocks and shares
• Investing in property at home and abroad
• Saving through a pension plan.

A pension plan is basically a long-term savings plan. You save regular amounts or lump sums, called contributions, to build up a retirement fund. Next to buying a home, it is probably the most important investment you will make in your lifetime.
The main advantage of a pension plan over other forms of saving and investment is the tax benefits available. At present, the main tax benefits are:

• Tax relief on your contributions

• Tax-free investment growth

• Tax free lump sum on retirement

Tax relief on contributions:
For every €100 of your income that you invest in a pension plan, the real cost to you after tax relief is less. It costs you:

• €80 if you pay tax at 20%
• €59 if you pay tax at the top rate of 41%

If you are an employee, the real cost will be even lower as you can also get some relief on PRSI (pay-related social insurance) and health levy payments. If you are a member of an employer pension plan or a company pension scheme, you don't have to pay tax or benifit in kind on any contributions your employer makes.
The maximum in earnings that you can take into account for pension tax relief is currently €150,000 per year.

The percentage of your income you can get tax relief on for pension purposes depends on your age. It increases as you get older.

Tax-free investment growth:

You don't have to pay tax on the growth of your pension fund. This means, it can grow in value more quickly than a standard investment plan, where you have to pay tax of 23% on any growth you earn.

Tax-free cash when you retire:

When you retire you can take part of your pension fund as a tax-free lump sum. The amount you can take depends on the type of pension plan you have. It is important to remember that your regular pension benefit will be subject to income tax.

We have experience dealing with the following types of pensions and can advise you on which is the best option for you:

• PRSA’s
• Personal Pensions
• Company pensions/ executive pensions
• Self Directed pensions
• Self administered pensions
• Group pension schemes
• Additional group benefits

Where can I get more information or pension advice?

1. Call Heritage Insurance Brokers on 01-6911017 to discuss your pension planning needs or to book an appointment.
2. Drop us an e-mail at: pensions@heritageinsurancebrokers.ie
3. Complete your details on our "pension advice/pension quotes" page and one of our finacial advisers will contact you to discuss your pension needs and book an appointment at a time that suits you.