For many people, retirement seems like a long way off, and with so much financial uncertainty at the moment, they tend to put retirement planning to the back of their minds. You’re probably not planning on reducing your standard of living when you retire, however, so have you thought about how you’re going to pay for it when you’re no longer working?
While the responsibility for funding your retirement ultimately lies with you, your employer is obliged to provide you with access to some form of pension. Even better, some employers also make contributions through an Occupational Pension Scheme. It’s important to know what pension option is available to you through your workplace.
Your employer is required to provide you with a facility to make pension contributions, and there are two options available when an employer sets up a pension arrangement for employees – an Occupational Pension Scheme or a Group Personal Retirement Savings Account (PRSA). A real advantage for employees whose employer offers an Occupational Pension Scheme is that the employer must make a ‘meaningful’ contribution, which is effectively free money for you. Employers are not required to contribute to a PRSA arrangement, but many choose to do so.
With both options, your employer must deduct your contributions from your pay, which is not only convenient but also means you don’t have to make a separate tax claim as your tax relief is automatically applied directly at source.
You should talk to your employer for more information on the options available to you.
Remember, if you pay into a PRSA, you don’t have to go with the provider that your employer has chosen - you can pick your own PRSA provider and pay your contributions directly to that PRSA provider from your own bank account. If this is the case you will have to contact the Revenue to apply for tax relief.
I’m already in a pension scheme
If you are lucky enough to be a member of a company pension scheme through your employment, this is a good start. However, do you know if the retirement income from your employer’s pension scheme will be enough for the lifestyle you want in retirement? Depending on the answer to that question and, if you can afford it, you might want to consider paying a little bit more.
One way to do this is through an Additional Voluntary Contributions or AVCs. They can be paid in a number of different ways - depending on the pension scheme you are in. Remember, your contributions to an AVC will qualify for tax relief up to the normal age related limits that apply.
Disclaimer
Life assurance and pensions 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 Bank of Ireland Life products is provided by Bank of Ireland, trading as Bank of Ireland Insurance & Investments. Bank of Ireland trading as Bank of Ireland Insurance & Investments is regulated by the Central 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.
Members of Bank of Ireland Group.
