Pensions
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These contributions are invested by the pension scheme provider, with the aim of growing your savings over time. The investment options available may vary depending on the pension scheme, but commonly include stocks, bonds, and other financial instruments.
The main purpose of a pension scheme is to provide you with a source of income during your retirement years when you are no longer earning a regular salary. The accumulated savings in your pension fund are used to provide you with a regular income, either as a lump sum or as regular payments, depending on the options available.
Pension schemes often come with certain tax advantages. Contributions made to a pension scheme are tax-deductible, meaning you can reduce your taxable income by the amount you contribute. Additionally, the growth of your pension fund is usually tax-free until you start withdrawing the money during retirement.
There are different types of pension schemes, including workplace pensions, personal pensions, and state pensions. Workplace pensions are typically provided by employers as part of an employee benefits package. Personal pensions, on the other hand, are set up by individuals who want to save for retirement independently. State pensions are government-provided pensions that are based on your contributions and eligibility criteria.
It is important to start saving for retirement as early as possible to benefit from the power of compounding and to ensure a comfortable retirement. Consulting with a financial advisor can help you understand the different pension options available and choose the one that best suits your needs and goals.
Whether you are looking to start a pension or you already have a pension in place that you would like to have reviewed to ensure it’s still meeting your needs, our team of specialist can provide personalised advice and guidance to help you make informed decisions about your pension plan.
We can assist you in understanding the different options available to you. There are several options available when it comes to pensions, and it’s important to understand the differences so you can make an informed decision. Some common types of pensions include:
Executive Pension Plans:
with this plan the employer sets up a pension fund for their employees and makes contributions on their behalf. The employer will choose the pension provider and determine the charging structure, which includes any fees or costs associated with managing the pension fund. As an employee, you have the flexibility to decide how much you want to contribute to your pension and which funds you want to invest your money in. It’s important to consider your long-term financial goals and risk tolerance when making these decisions.
All contributions are deducted from your gross wages before any income tax, Universal Social Charge (USC), and Pay Related Social Insurance (PRSI) are taken. However, income tax will be due on the net amount left after pension contributions are deducted.
Personal Pension Plans:
If you are a sole trader or an employee without access to an executive pension plan or occupational pension scheme, you have the option to set up a personal pension plan. This type of plan is a private pension that is not linked to any employer or company. In a personal pension plan, all contributions are made by you, and your employer cannot contribute. You have the flexibility to choose from different providers, investment funds, and charging structures that best suit your needs and preferences.
It’s important to note that there is no limit to the number of personal pensions you can hold in Ireland. This means that if needed, you can have multiple personal pension plans with different providers.
When it comes to tax benefits, if all contributions are taken from your sole trader bank account before the income tax deadline, they are deducted from your earnings before personal income tax is calculated. This can help reduce your taxable income and potentially lower your tax liability.
PRSA / Personal Retirement Saving Accounts:
PRSA set up by you as a Sole Trader:
If you are a sole trader, you have the option to set up a Personal Retirement Savings Account (PRSA) as a private pension plan. This type of pension is not linked to any specific company or occupation, allowing you to continue contributing to it even if you change your trade or occupation.
All contributions to the PRSA come from you as a sole trader. If you make contributions before the tax deadline, they are deducted from your earnings before tax is calculated. This can help reduce your taxable income and potentially lower your tax liability.
As a private pension, you have the flexibility to search the market for the best options and change providers, charging structures, and funds you are invested in if required. This allows you to tailor your PRSA to your specific needs and preferences.
PRSA set up by an Employer for you as an Employee:
If your employer sets up a PRSA for you as an employee, it is important to note that your employer is not required to contribute to your Employee PRSA. The employer’s responsibility is to facilitate access to a PRSA and facilitate deductions from your salary if an Executive Pension Plan is not available.
All contributions to the PRSA will be deducted at source from your gross wages. Income tax relief is already applied to these contributions, so there is no tax back to claim afterwards. Your employer has the authority to decide which company will be the PRSA provider for the plan.
Buy-Out-Bond / Retirement Bonds:
is a common scenario for individuals who change careers or employers throughout their working lives, resulting in accumulated retirement plans linked to different employments.
In cases where a company pension, such as an Executive Pension Plan or Occupational Pension Scheme, is being wound up by the employer or when an individual leaves service with an employer where they were a member of an Occupational Pension Scheme, they will need to decide what to do with their pension fund.
One option available is to transfer the pension into a Buy-Out-Bond/Retirement Bond. This allows individuals to maintain the same retirement benefits they had with the company scheme, following the same rules and retirement age. However, the employer will no longer administer the pension fund or contribute to it. The individual becomes the sole owner of the plan, making all decisions regarding it.
It’s important to note that a Buy-Out-Bond is designed to carry the pension fund until retirement and does not allow for new contributions to be made into it.
Our goal is to help you maximise your retirement savings and ensure a comfortable lifestyle in your golden years. We’ll work closely with you to develop a customised plan that takes into account your unique circumstances and objectives to recommend the most suitable plan for you.