Fund your future

Welcome to the Pension Pot podcast series 2024

We aim to show you how to plan forward to achieve your best retirement life and improve your longer term financial wellbeing. Our industry experts will help you learn how pensions work so you can better understand your options, the very attractive tax reliefs, and why it’s important to know how your pension is invested. Gain the knowledge now to make smart decisions to help fund your future and achieve a better retirement lifestyle.

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Episode 1: Fund Your Future – Setting Yourself Up For Success

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Topics: We’ll hear about what you need to consider when thinking of your pension. Whether you’re thinking of starting or already started, we’ll help demystify pensions so that you can set your future self-up for success and take control of your financial wellbeing.

Host: John Kennedy, Editor Think Business

Guest Speakers: George Nolan, Head of our Pensions Technical Team in Bank of Ireland Life and Ger Durkan, Senior Wealth Manager Bank of Ireland

Episode 2: Fund Your Future – Maximising your pot with AVCs

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Topics: We’ll hear about what you need to consider to boost your pension pot. Find out how to maximise your pension pot value, the benefits of saving a little more, what are Additional Voluntary Contributions (AVCs) and how can they help?

Host: John Kennedy, Editor Think Business

Guest Speaker: Evelyn Maloney, Corporate Pensions Consultant with Bank of Ireland

Episode 3: Fund Your Future – Coming Close To Retirement. What Are My Options?

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Topics: For many, starting to consider their plan for drawing down their pension happens too late when retirement is imminent. Ideally you should start thinking of your retirement options 3-5 years ahead of your retirement date. Find out how to maximise your pension pot value as you near retirement, what are the key decisions for planning the drawdown of your pension and when is the ideal time to start contemplating your options?”

Host: John Kennedy, Editor Think Business

Guest Speakers: Kevin McDermott, Senior Wealth Managers with Bank of Ireland and George Nolan, Head of our Pensions Technical team in Bank of Ireland

Episode 4: Fund Your Future – Women & Pensions

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Topics: We’ll help you understand more about pensions especially women – who would have traditionally taken up the roles outside of paid employment such as carers for elderly family or raring their children. Nowadays though, we’ve seen a definite shift away from that old traditional model. Our research suggests that women have disproportionately poorer pension coverage than men. There are a number of reasons for this, some easier than others to tackle.

Host: John Kennedy, Editor Think Business

Guest Speaker: Lisa O’Flynn, Senior Wealth Manager Bank of Ireland

Bonus podcast – Auto-Enrolment

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Ireland has been the last remaining OCED country without a mandatory pension system – that is about to change in 2025. Both employers and employees will need to plan for this but the first step is to be informed of what is might mean for you. Join us to get informed on the key aspects of the proposed scheme and what it might mean for you.

Host: John Kennedy, Editor Think Business

Guest Speaker: Mark O’Connor, Head of Corporate Pensions, Bank of Ireland and Bobby McDonnell, Corporate Pension & Risk Consultant, Bank of Ireland

1. Did you know?

Our Pensions survey* showed that more men hold a personal pension than women – 49% of men have a private pension versus 37% of women. And that men have a better knowledge of how pensions work and the tax benefits attaching to pension saving. 50% of men say they understand how pensions work versus 38% of women. 45% of men say they understand the tax benefits of pension saving versus 29% of women.

However, it’s true to say:

• The qualifying age for all State pensions in Ireland is 66. The State Pension (Contributory) is paid to people from the age of 66 who have enough (PRSI) contributions. The State Pension (Contributory) is not means tested. You can have other income and still get it. The State Pension (Non-Contributory) is a payment for people aged 66 and over who do not qualify for a State Pension (Contributory) (SPC). The State Pension (Non-Contributory) is taxable, but if it is your only income you are unlikely to pay tax on it.
• Currently, you can qualify for up to a maximum of €200,000 to be taken as a tax free pension lump sum. This is a total lifetime limit even if lump sums are taken at different times and from different pension arrangements. The amount of lump sum you can take out of a pension arrangement is limited, with different rules applying depending on the type of arrangement you have.

You can find more about building a retirement plan that works for you here.

*Bank of Ireland/RedC National Pensions Survey, 7 – 14 July 2022

3. Tax Relief

Happily, that statement is completely wrong! You pay 0% tax on any growth within your retirement fund. Unlike other savings plans, any growth on the investment of your pensions contributions is not subject to tax. This is a huge incentive to save into a pension, when you consider that you pay DIRT at 41% on any interest earned on bank accounts and exit tax of 41% on any gains made on most investments.

But it’s true to say that:

Every €100 saved into a pension will actually cost you €60 after tax (assuming you’re a higher rate tax payer*). So this makes saving for the future a lot more attractive. It’s all about putting something aside now to build up your pension pot for when you retire.

And another great incentive is that the amount you can get tax relief on increases as you get older. The table below shows the age related contribution limits on your pension saving. So as you get older, you can save more of your income into your pension – and still benefit from the generous tax breaks mentioned above.

To find out more about the savings you could be making with a Pension plan, click here. Alternatively, to arrange a meeting with a Pension Advisor, click here.

*Revenue limits, terms and conditions apply.

5. Employer contributions

This one is false, because employers are not required by law to contribute to your pension. At least, not at the moment. Although many do as a benefit to their employees. But there are changes coming into the Irish pension system in early 2025 called Auto-Enrolment. This will impact many businesses that today either don’t offer a pension plan to their employees or who don’t currently offer an adequate pension plan to their employees. Auto-Enrolment has long been discussed for employees in Ireland. It will be welcomed as it will increase the overall pension coverage of our overall population.

Did you know, many people aim for an annual retirement income of between 50% and 66% of their final salary. However, everyone’s situation is different and it really depends on the type of lifestyle that you want for yourself in retirement, as well as on your own specific circumstances. You may have expenses now that you won’t have when you retire such as education costs or mortgage repayments. An advisor in your Bank of Ireland branch can meet with you to discuss your retirement needs and help you put a plan in place designed to achieve your financial goals based on:

• your current age
• when you would like to retire
• the kind of lifestyle you want
• what you can afford to save

To arrange to speak with an advisor to talk about your retirement plan, click here.

3 simple steps to a better retirement

1. Know what you have

   Knowing what you have is a great starting point. It’s good to review your existing savings and any existing pension policies you may have contributed to over the years – especially if you have changed jobs during that time.

2. Know what you want

   Knowing what you want from life when you do retire is key. Consider what kind of lifestyle you see for yourself. Do you plan to travel every year? Enjoy big occasions and celebrations and spoil the grandkids with trips and family adventures to the zoo or the panto?

   You may need an income for up to 30 years once you retire so setting realistic expectations of the lifestyle you want and knowing how much you will need to have saved for your retirement years is vital.

3. Know how to get there

   Getting expert advice is critical to having a good understanding of what you need to do in order to have a comfortable retirement. Many think the whole area of pensions is too complicated. Our advisors have a wealth of experience and they can explain and guide you through the process to get a plan in place that’s right for you.

Don’t put it off until tomorrow

Many people think that putting a retirement plan in place is too complicated. But pensions are simply long term savings that help you to pay for the things you want whenever you stop working so it makes sense to organise yours now.

Most pensions are very flexible. You can usually stop and start when you need to, and increase or decrease your contributions at any time. The earlier you start the better, even if you can only put in less than you would like to. The longer you save the more chance you have of achieving your retirement goals. Our advisors can make understanding pensions easy. They’re available to meet with you face to face, or via virtual meeting or chat with you over the phone to talk through your pension needs.

What’s your pension type?

Patricia, self-employed farmer who needs flexibility, starting a pension

I’m Patricia, I’m 42 and I’m married to my husband Lorcan and we have two children, aged 9 and 6. We’re living in Kilkenny on my family farm, recently passed to me by my father. We live in the farmhouse, keeping me close to the farm at all times but close enough to the local village and schools for the kids. My family have been part of this community for generations so we’re well connected in the community. The kids are heavily involved with the local GAA and other sports and Lorcan is a landscaper so a lot of his work is local too.

Farming is in my blood so I couldn’t see myself doing anything else. As always, it has its ups and downs but thankfully we’re having a few good years now with barley and wheat. Lorcan’s work has also become more stable than recent years gone by. The re-zoning of land close to the village for residential building has really given his landscaping business a boost.

What plans do you have around retirement?

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  With a young family, over the years our priorities have been more short term focused but now is the time to start planning properly for our future. We recently put a savings plan in place for the children’s future college education but one piece of advice my father gave me when taking over the farm was to get a pension started and so I did! It wasn’t much at the time but it has got me into a good savings habit.

  Farming is tough, physical work and I’ve seen the toll it can take so ideally, I’d like to wind down a bit in my 60’s. I probably won’t retire in one go but I’ve a few hobbies, such as bee keeping that will keep me busy. Some people I know say that their farm is their pension but that is fine if you plan to sell it – I see it that Lorcan and I are just minding it for the next generation – it has been in our family for centuries now.

  Putting a plan in place now for the future is a smart move. I won’t be prepared to retire when I want to if I don’t, so getting professional advice was paramount to me. When I spoke to the advisor in my local Bank of Ireland branch, the message they gave me was simple – some of what you earn this year is to be spent this year; some needs to be put aside for what may be needed next year and then a portion is for the future when I stop working.

  What decisions do you need to make?

  I don’t work nine to five, five days a week with a salary paid into my account on the same day every month. I also know all too well that the weather can change my fortunes as can the prices that I can achieve for my crops. So that’s why I put aside what I can every month and take a closer look at it when I’m dealing with my tax return in November.

  My plan and the decisions we make when adjusting the plan is all about what is right for us as a family and as a farming business. I’m always happy to hear how saving for our future retirement also allows me to cut down my tax bill.

  I know we need my money to grow and this means some ups and downs along the way. That goes with business and with life but my aim is to build up a healthy pot for when it’s time for me to retire. This means that from time to time we may have to “cut our cloth” and drop back on the pension savings for a few months but we’d like to get back on track as soon as we can. But also, in the better years, put a little extra aside.

  My pension plan allows me to put aside what I can, when I can, and that’s exactly the flexibility I need!

Saoirse, Company Director, enhancing her pension

I’m Saoirse, I’m 55 and I live in Dublin. I was recently given the opportunity to become a Director of the business I’m working in so that’s been a big change. I wouldn’t have thought I’d ever become a Director of a business but I took the opportunity from some of the inheritance my parents left me. Mum and Dad would have wanted me to be secure and set up for life and I think that is exactly what buying into the business has given me.

Since my parents passed away, I’ve thought a lot about my finances and it dawned on me, it’s up to me to look after myself into the future. Having met with my financial advisor a couple of times recently, I feel there’s a weight lifted off my shoulders, having put a plan in place for critical illness and health insurance – I needed to make sure I’ll be ok financially if something bad were to happen to me. And I know it’s time to focus on putting a plan in place for the type of lifestyle I want when I retire.

I’m a good saver, I don’t have any real debts and with my parents’ inheritance, I’ve a decent bit of savings for any rainy days that may come my way. But, I do know how to look after myself. I love going on lovely city trips and vacations throughout the year and myself and my friends have a really good time so I don’t want that to stop when I finally retire.

What decisions do you need to make around planning for the future?

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  I met with my financial advisor, giving them a clear picture of what I have and “where I am” with my finances. It really was time well spent – for both of us. I hadn’t put much thought into the different pension pots I had been saving into over the years with different employers and nor had I considered what the buying into the business would mean for me in terms of pension options.

  As a business that is going through change, we’ve collectively taken the time to reflect on the goals we have for the company. Part of this is taking care of our future retirement plans. Our accountant spoke to us about the benefits of pensions in terms of reducing our income tax bill and we think we have a plan that is flexible and adaptable for each of our needs.

  I’m amazed at how much the company could contribute for me and not just that – we could claim corporate tax relief on it too. The tax breaks really make it affordable and attractive. The advice I got really helped me to work out how much I could put in and what was the best way to get my pension pot growing. Paying in on a monthly basis what you can afford and then topping it up at the end of the year to maximise tax savings is great. It sounded complicated at first but when you have a plan in place, it all made perfect sense.

  I now know what my advisor means when she says “It’s all about the future you!”

Brian, an employee, approaching retirement, making the most of his pension

I’m Brian and I’m 63. I’ve worked in hospitality for the last 36 years as a hotel manager. I started out at the bottom and worked my way up to where I am today so I think it’s safe to say I’ve seen it all.

Covid has been a blessing and a curse for me. It was awful to see the hotel shut for such a long stretch and it’s taking a lot to get it back up and running but on a personal level, having to slow down and not go to work every day was a good insight to what retirement might be like.

What plans have you around retirement?

My wife Aileen has retired already. She was the secretary at our local secondary school for a number of years once our own children grew up and flew the nest so she’s already receiving a modest pension along with the State Pension.

We see ourselves living a modest lifestyle in retirement. We love playing golf but a lot of our time is spent with our family, our kids and our grandkids. Our girls live locally but our son lives in Canada with his family so we don’t get to see them often. We’d like to do a bit more travel once we retire, go to visit Stephen and the family and then we’d love to go to the Ryder Cup in the States in 2025.

I never really gave my pension or what I was saving into it much consideration until recently but having worked for nearly the last forty years, I can now see the benefit of both myself and my employer putting in small regular contributions and having it build up over time. When I got a promotion about ten years ago, a friend at the time advised me to do some AVCs. This has really bumped up the overall pot. What money I’ll have to spend every week will look very different because of the little extra I put in over time.

I’m ready for retirement, so we’re planning on making the most of saving into my pension for the next few years while I’m working and then to enjoy life once I retire. I’m hoping to retire in about two years so the money we put away won’t be locked away for long.

What decisions do Brian & Aileen need to make?

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  Making a plan is key! Having recently sat down with my Bank of Ireland advisor, I now have a clear picture of what my incomings and outgoings are, allowing us to clearly see what is realistic to save towards my pension for the next few years. Secondly, having that discussion about the options available to me when I do retire gave me a sense of what my “retirement income” will be. I’ve always looked at my pension pot as one big number but never before considered what that actually gave me annually to live off in retirement. I know I’ve a big decision to make about how I decide to draw down my pension but getting advice on the options now before retiring is something that I’m glad I’ve done sooner rather than later. The plan gives us clarity for the future.

  With a few years before I finish at the hotel, I know I still have some time to add to my pension pot while taking every advantage of the tax breaks. Getting the right amount of growth without taking on too much risk is important for us at this stage. We remember inflation in the 1980s so we know we need to try and make sure our money grows to keep pace with the rising cost of living.

  We were told that our plan should be suitable to meet our goals but still allows us to sleep at night. And that’s exactly what it is!