The benefits of starting a pension
These days people are living longer and healthier lives than previous generations. It means that, for many, retirement is simply the start of a new and exciting chapter in their lives.
Moreover, people don’t grow old like they used to do. Nowadays, people want to have fun in retirement: travel more, spend more time with family and friends, learn new skills and stay active.
However, when you stop working, your income from employment will come to an end but unfortunately, the bills will just keep coming.
Indeed, the State pension isn’t that generous. The full personal State Pension (Contributory) is just over €13,000 a year. In addition, the profile of our population is getting older, meaning less money will be available in the future, as more people will be retiring and less people working. This is why the government is actively encouraging everyone to save for their retirement by offering attractive tax benefits.
Your pension is the money that you’ll live on once you stop working. A Pension Plan allows you to make regular payments and/or transfer one-off lump sums into a fund for retirement. The amounts saved into your pension are called “contributions”.
Pension Plans offer different benefits. The benefits available to you depend on the kind of pension you have taken out and the tax arrangements at the time of your retirement.
Top reasons for having a Pension
1. Average Life expectancy is growing in Ireland
These days people are living longer and healthier lives than previous generations. This means a bigger pension pot is needed for retirement.
2. People don’t grow old like they used to.
Nowadays, people want to have fun in retirement: travel more, spend more time with family and friends, learn new skills and stay active.
3. The state pension isn’t that generous
A pension complements the State pension. At just €243 per week[NL1] , your State pension may not be sufficient.
4. Starting early means more money in the pension pot!
The earlier you start your pension savings, the better retirement income you will have. It really is that simple.
5. Your payments can grow tax-free.
The money in your Pension Plan can currently grow tax-free so it should have the potential to grow faster than in other types of savings plans which are subject to tax.
6. It allows to benefit from the downs as well as the ups.
Your regular contributions can benefit from periods of stock market volatility – particularly in the early years.
7. It provides significant income tax relief.
Income tax relief for pension contributions is given at an individual’s marginal rate. This will either be 40% for a higher rate tax payer or 20% for a standard rate tax payer.
8. It’s never too late.
Even if you’re approaching retirement, it may still be worth paying money into a pension plan, as you’ll be setting aside something for the future.
9. Take a break!
Your pension plan is there to support you when you retire, not stop you from living while you get there. You can take payment breaks if you need to and change your contributions depending on your needs at the time.
The earlier you start your pension savings, the better retirement income you will have. It really is that simple.