Let’s Talk Pensions with Brian Gaffney QFA RPA BA
A pension is a long term savings plan that helps you save for your future. Unlike a regular savings account, money invested in your pension can provide you with important tax breaks. In addition when you retire and look for access to your fund, the benefits can be available in a tax efficient way.
State Pension Uncertainty – the State Pension (Contributory) personal full rate for a single person is currently €248.30 per week or €470.80 per week with an adult dependent allowance. Demographic changes in Ireland, as in countries across the EU, will put pressure on government finances as the cost of state pensions and health care for the elderly increase. Currently in Ireland there are 5 adults of working age for every pensioner, but this ratio is predicted to change to 2 to 1 by 2050. Simply put, you cannot be sure the State will provide you in your old age with the same level of pension income, that you may expect. The age you will receive State Pension is increasing all the time – Legislation is now in place that will increase the age at which the state pension becomes payable in the future.
Income Tax Relief – Income Tax relief is still available on contributions made personally to a pension. This relief is available on up to 40% of the contribution for a top rate taxpayer, or 20% for a standard rate taxpayer.
Pension Contribution €2,400 per annum (€200 per month)
Tax Free Retirement Lump Sum – you can take 25% of your pension fund as a retirement lump sum or with a Company pension you can instead to choose to take a retirement lump sum of up to one and a half times your final salary depending on length of time employed. The maximum total tax-free is €200,000.
Pension Life Insurance – the same income tax relief that applies on pension contributions is also available for Pension Life Insurance which means cheaper life cover. Example of comparison of costs of Life Cover and Pension Life Cover per month below.
To be eligible to claim income tax relief you must be taxable either Schedule E or Schedule D (case 1 or 2). Regardless of your employment status, we can help you choose the type of pension that works for you.
If you would like to have a chat or have any questions, please feel free to contact me on 01 849 8989 or 086 2427562.
Brian Gaffney QFA RPA BA