A Personal Pension is a personally owned pension plan, held in your own name. Unlike a company pension plan, where your employer may also make payments, only you can make contributions to a personal pension. Personal Pension Plans are best suited to the long term self-employed who do not operate under a limited company.
- The average person retiring tomorrow aged 65 years has a life expectancy of between 20 years, that’s a significant amount of time to enjoy in retirement.
- It takes a long time to save for retirement and the earlier a person starts the better.
- Taking stock of your existing pension can reduce investment charges and allow greater control over your benefits come retirement.
Personal Pension Advantages
Personal pension plans offer an advantage over a PRSA in that they do not have any contribution charges, meaning 100% of every contribution you make is invested.
Unlike a PRSA however future employers cannot ever contribute to them and if you do decide to set up your own limited company you cannot transfer your personal pension into your new executive pension.
That said, however, you do not lose out on the pension pot built up under a personal pension plan if you do move from self-employed to your own limited company or to company employee status, you simply make your Personal Pension “paid-up”.A paid-up Personal Pension will continue to be invested and once you reach retirement you can simply combine all your pension pots.
Pension Investment Videos
Starting a Personal Pension Plan
The Right Advice
There are several ways to best set up your Personal Pension Plan dependent on your individual circumstances. Our job is to provide the best pension advice, offering the broadest range of investment choices, with minimum cost aligned to your personal investment risk profile.
When arranging your pension plan you need to be fully aware of the underlying costs involved, when also choosing the right investment funds and strategy to grow your pension fund over time.
Broker access and advice need to be ongoing, so we provide 24/7 online access combined with regular investment updates.
Our fully comprehensive service is built into your plan’s single annual management charge levied against your pension pot, which is known as the AMC. This will never exceed 1% PA and can be even lower, depending on the type of funds you choose.
There is no charge levied against your pension contributions, so 100% of all pension contributions are invested.
At One Quote Financial Brokers, our Personal Pension Plan offerings include:
- Free Personal Consultation.
- Single Low Annual Management Charge (AMC).
- Broadest Investment Choice: Mutual Funds, Direct Stocks, & ETF’s.
- 100% Investment Allocation.
- 24/7 Online Plan Access.
- Free Optonal Fund Switches.
- Annual Benefit Statements.
Personal Pension Contribution Limits
Maximum Contribution Limits
This relief is more generous as you get older. However, you pay PRSI and the Universal Social Charge on your pension contributions.
Personal pension contribution tax relief is more generous as you get older, rising from 15% under age to 30 to as high as 40% over age 60.
There is an upper limit on the annual earnings that may be taken into account, which currently stands at €115,000. Jointly assessed couples can however each avail of their own separate thresholds based on their own age and annual PAYE income.
Personal Pension Retirement Benefits
Your Options at Retirement
Come retirement, when you’re ready to take your benefits your options are to take a tax-free lump sum and buy an Annuity which is a paycheque for life, or having taken your lump sum to reinvest the balance in an ARF and make income withdrawals from that.
Tax Free Cash
You can draw a tax-free lump sum based on your salary and service to a maximum of 1.5 times final remuneration where you have more than 20 years of service or you can take a lump sum based on 25% of the value of the pension pot. A limit of €500,000 applies to the tax-free lump sum where the first €200,000 is tax-free and the balance up to €500,000 is taxable at 20%.
An annuity pays a retirement income for the rest of your life in exchange for the balance of your pension pot at retirement.
An ARF allows you to retain your pension pot at retirement, subject to minimum withdrawals and can be passed on to your family on death.
Personal Pension Fund Choice
Assessing your investment options
As a pensions broker, we compare the market to offer the broadest range of investment fund options including; indexed, active and self-directed options.
We also offer ESG investing which incorporates environmental, social and governance elements into the investment process.
Our partnered fund managers include a choice of; Zurich, Aviva, New Ireland, Irish Life, Standard Life, Columbia Threadneedle, BlackRock, Dimensional, BNP Paribas, Legal & General, BNY Mellon, State Street, Goodbody, Merrion, JP Morgan, and Invesco.
Existing Pension Review
Existing Pension Plans – Cost Reduction Audit
If you already have a Personal Pension Plan in place, you need to be sure of 3 things:
- That the underlying investments are in line with your attitude to investment risk
- That the plan is being funded directly through company monies.
- That the underlying charges are reasonable and transparent
Many Executive Pension Plans are been overcharged by inbuilt plan costs, including:
- Investment Contribution Charges
- Ongoing Adviser Commissions
- Excessive Fund Manager Fees
If you’re in any way unsure about your Executive Pension Plan charges, then you should consider talking to One Quote about a cost-saving pension review.
If you have any questions with regard to setting up a new plan or leaving an existing employer pension, please visit our FAQ section or call us on: 01 8450049