Pensions can seem complicated...
Pensions can seem complicated and people usually have many questions as their retirement gets closer. We’ve included some common questions below. And remember, your Advisor in your
Bank of Ireland branch is available to answer any other questions you may have.
When can I access my retirement fund?
Typically, you can access your fund in full at retirement. In general, people can retire between age 60 and 70 but there are exceptions. Your retirement age may depend on the rules of your pension arrangement or on your occupation.
What are my options when I retire?
The options available to you depend mainly on the type of pension plan you have and the size of your retirement fund.
You can normally take part of your retirement fund as a tax free lump sum, subject to a limit of €200,000*. Even if your retirement lump sum is greater than €200,000, the next €300,000 is only taxed at the standard rate (currently 20%).
You will then need to decide how to take the remainder of your retirement fund. Do you want a guaranteed income for life or would you prefer to continue investing in your retirement and draw income from that fund? Your Advisor can go through the options with you and help you make the best decision for you.
How do I decide the right option for me?
You should receive detailed information on your actual options before you retire and you should carefully study these. Everybody’s circumstances are different so it is important to discuss your options with your Advisor before making a decision.
The option that is right for you will depend on many factors including:
- The size of your retirement fund
- The level of income you and your family will need during your retirement years
- The value of other assets, apart from your retirement fund, you have to fall back on
- Whether security or investment growth is more important to you during your retirement years
- Whether you wish to pass your retirement fund on to your dependants on your death
- Your current state of health.
Is it worth putting more money into my pension plan now?
Putting more money into your pension plan as you close in on retirement can be an effective way to help make up any shortfall that you may have identified in your pension savings, or if you just want to take advantage of the tax benefits on offer.
The maximum percentage of your salary that you can normally save into your pension plan each year, and claim tax relief on, increases as you get older. If you are aged 60 or over, this is up to 40% of your salary.**
* Under current Revenue rules the first €200,000 of any retirement lump sum is tax free with any balance up to €500,000 subject to Income Tax at the standard rate.
Any amount paid out in excess of €500,000 will be taxed at your marginal rate and will also be subject to PRSI and the Universal Social Charge. Any retirement lump sums taken on or after the 7th of December 2005 will count towards these limits.
** It is important to note that tax relief is not automatically granted. You must apply to and satisfy Revenue requirements. Revenue terms and conditions apply.