Whatever your age or circumstances, or whatever enormous changes may be going on in the word right now, it’s always a good idea to plan for your retirement.
1.Save tax
Save tax:
- On pension contributions
- On investment growth
- Tax free Lump sum at retirement (within certain limits)
2.Your income could drop 70%
Your income could drop by almost 70% in retirement as the maximum State Pension (Contributory) is €12,912* a year, but the average wage is €45,111** a year.
* Annual State Pension Contributory www.welfare.ie
**Source: CSO, Average earnings in Q1 2021, Earning and Labour Costs June 2021.
3.You may need an income for up to 30 years
You may need an income for up to 30 years or more when you retire. This could amount to as much as a third of your life, so it makes sense to save now.
4.Retirement age 68?
If you do qualify for the State Pension of €12,912 a year, you could be 66 before you receive it. Currently the qualifying age for the State Pension is 66. This was meant to be extended in 2020 to 67 from 2021 and 68 from 2028. However, in Budget 2021, it was announced that the qualifying age for the State Pension would remain at 66.
If you choose to retire before aged 66, you could have a gap in your retirement income.
5.Start Early
Starting pension contributions early can have a significant impact on your retirement fund. If you start paying €250 a month from age 25 your projected pension pot would be over €243,460. If you wait until you’re 45 to start, that could be just €81,803.†
† The figures are based on level monthly contributions of €250. This illustration assumes a gross investment return of 4.5% per annum, a 5% premium charge and 1% annual fund management charge. This rate is for illustration purposes only and is not guaranteed. Actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated.
6.Up to 40% tax relief
Higher rate taxpayers can benefit from up to 40%* in tax relief on every €1 saved. A €100 contribution only costs you €60. And even if you pay tax at the standard rate, you can benefit from 20% tax relief.
*Assumes higher rate tax payer. Source: Revenue.ie August 2021. It is important to note that tax relief is not automatically guaranteed; you must apply to and satisfy Revenue requirements. Revenue limits, terms and conditions apply.
7.Growth
A pension can give you a great opportunity for growth over the longer term. Unlike a normal investment any investment growth will accumulate free of exit tax.
8.Lump sum
At retirement, you may be able to take a retirement lump sum, tax free, subject to a limit of €200,000.*
* Revenue rules apply.
9.Investment Choice
Choose from a wide range of investment funds from global investment managers.
10.Start now
The sooner you start the better. Even if you’re older, it’s not too late. You can claim tax relief on a higher percentage of your earnings, so there is still time to catch up.
Disclaimer
Life assurance and pension products are provided by New Ireland Assurance Company plc., trading as Bank of Ireland Life. New Ireland Assurance Company plc., trading as Bank of Ireland Life is regulated by the Central Bank of Ireland.
Advice on life assurance and pension products are provided by Bank of Ireland.
Bank of Ireland is a tied agent of New Ireland Assurance Company plc trading as Bank of Ireland Life for life assurance and pensions business.
Bank of Ireland trading as Bank of Ireland Insurance & Investments, Insurance & Investments, Bank of Ireland Private and Bank of Ireland Premier is regulated by the Central Bank of Ireland.
Members of Bank of Ireland Group. Information correct as of August 2021.
