Pension Plan – FAQ’s

Find the answers to Irish Pension Plans most frequently asked questions. Learn about pension tax breaks, what pension plans invest in, the importance of regular pension reviews, options for cashing in your pension early and what to do, if leaving your employers pension scheme. We are here to make pension planning simple and also explain your pension plan options come retirement.

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Pension Planning top-tips
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Pension Planning top-tips

  1. The average person retiring tomorrow aged 65 years has a life expectancy of between 20 – 23 years, that’s a significant amount of time to enjoy in retirement.
  2. It takes a long time to save for retirement and the earlier a person starts the better.
  3. Taking stock of your existing pension can reduce investment charges and allow greater control over your benefits come retirement.

 

Pension Plan – Frequently Asked Questions

How much is the State Pension?

The current State Social Welfare Pension is only: €206.30 per week. The contributory pension starts at age 66 and the non-contributory not until age 67. Is this sufficient to meet your financial needs when you retire?

Why should I take out a private pension?

If you have not got a pension in place with adequate contributions being invested to support your income in retirement (and don’t have other significant income, or saleable assets come retirement), then you should start a pension plan. How else will you have a sufficient income to enjoy a good retirement?

What is an Executive Pension Plan?

An executive pension plan, also known as a Directors Pension plan is a private individual pension plan where the company can fund for the directors retirement and receive full corporation tax relief in doing so. The director themselves can make personal contributions in addition to reduce their own personal tax liabilities when making personal annual tax returns.

What is the difference between a Personal Pension and a PRSA?

With regards to starting a private pension, if your current employer does not provide one, your options are a Personal Pension, or a PRSA. Personal circumstances and future employment plans, will influence which best suits each individual case.

A Personal Pension Plan can offer better value in terms of charges than a PRSA, but can never be transferred to another pension plan and you can’t continue to contribute to it and receive tax relief, if you later join a new employer pension scheme.

A PRSA is fully portable if you change your job and you can stop and restart making contributions at any time. Although not obliged to do so, your employer may contribute to your PRSA, whereas an employer cannot contribute to a Personal Pension Plan.

There are two types of PRSA’s – Standard and Non-standard.

Standard PRSA: has a set investment strategy and lowers the risk as you get closer to retirement.

Non-standard PRSA: offers ongoing investment advice, meaning the charges are slightly higher.

What are the tax pension plan breaks?

A pension plan provides full tax relief on your contributions, as well as tax free fund growth and a tax-free lump payment option come retirement.

I already have a pension plan, why should I review it?

One Quote’s qualified independent pension advisors have many years’ experience in the pensions industry and provide you with expert advice, whether staring out, changing job, reinvesting, or seeking to review your existing pension.

If you’re self-employed, or a company director you may be paying too high an annual management charge, or receiving a reduced investment allocation to support your brokers commission. It is also possible, that your investment funds are not properly aligned to your approach to risk. We can provide a free audit to make sure you’re secure in knowing that you’re getting best value and appropriate investment risk.

Our pension clients also benefit from daily on-line access, half yearly benefit statements and annual review meetings as part of our standard review service.

I am leaving my job, what should I do about my pension?

If you were in a final salary, or defined benefit pension scheme then it is most likely best to leave your fund value there for future access. If you were in a defined contribution scheme, then you should consider moving the fund to your new employers pension scheme, or to your own Personal Retirement Bond, were you can govern the investment choices.

I am retiring soon, what are my pension options?

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. You have the option to take a tax-free lump sum and may be able to use the balance to avail of:

  1. A pension income for life (an Annuity)
  2. An Approved Retirement Fund (ARF)
  3. A taxable lump sum

Should you wish to reinvest part or all of your accumulated fund in an ARF contact us for more information on: 01 8450049.

How do I ensure best advice and value for money?

We compare charges and investment performance of all leading insured and self-directed pension providers. We ensure that the recommended pension plan option, matches your appetite for investment risk and that any charges are fully transparent and kept to a minimum. We also offer you full on-line access to your pension plan from inception, with regular investment performance reviews.

Can I cash in my pension early?

Since a change in legislation on 22nd June 2016, you can now retire from age 50 and take 25% of you fund tax-free. This is the case for all pension plans, including group employer schemes. Once you have taken your 25% tax-free, you can reinvest the 75% in an ARF (investing in funds for tax free growth as before) and you can also make regular and ad hoc withdrawals to provide an income.

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