Why should I have a pension?
It’s important to know what a pension is. It’s also important for people to understand their pension & the different types of pension scheme currently available. A lot of people know or understand the pension which you get of the government when you get to retirement age.
So, let’s understand the one many people will be familiar with first, called the “State Pension”. This will make it easier for you to then understand why the other pensions options available are relevant to your own individual circumstances & how best to plan for the future regarding your ``pension``.
What are the Non-State Pensions?
There are 3 different pension options other than the state pensions mentioned already. Self- Invested Pension Plans, Occupational Pension schemes, & Stakeholder pensions.
The main point to note regarding any pension & payments you will receive when you retire is start as early in your life as possible as the amount you have paid into your pension throughout your working life will have a huge baring on how much you will receive per week in your pension. The effects of compound interest could also boost the fund.
Pensions within companies.
Within companies / employers that have pensions schemes in place for their employees. There are typically 2 types of occupational pensions. Contributory & Non Contributory Pensions. A lot of employers will give the employee the option to choose to be one or the other.
Contributory Pension
If the employee opts for the Contributory Pension, they will have agreed amount determined by the company scheme pension plan taken out of their wages & put in the pension scheme on their behalf. The company / employer will also make an additional contribution into the scheme for you.
Non – Contributory pension.
Non – Contributory pension scheme is when ONLY the employer pays into the pension scheme on your behalf & you make NO contributions towards the pension
PRSA Pensions Scheme
PRSA pension schemes were introduced to be used by companies that did not want to be part of occupational pension schemes. Your PRSA can be transferred from job to job.
Since 2003 employers that do NOT have an occupational pension scheme in place for their employees must provide access to at least 1 standard PRSA.
If you already have a personal pension in place, you should contact a broker (hopefully us!) & discuss your individual circumstances with the broker so you can then best decide the next step which we are happy to help you with
PRSA pension moves with you & your job.
A PRSA is designed for a person to save for their retirement.
You can invest in your PRSA regardless of what your own personal employment status is. It allows you to make your own investment decisions usually with the help & guidance of a good broker or insurance company as mistakes can be costly & it is best to try & avoid those mistakes & consult with an expert.
Why should I have a personal pension?
A personal pension is designed to help you build up an amount of money which when you retire you can access.
You can look it as a fund that helps you live a life more comfortably even though you are no longer getting a regular income in from your job.
Your Personal Pension is a pension that is personally owned by you under your personal name.
Only you can make the contributions to your personal pension.
Self - Employed & Pensions
Personal pensions are typically used by self-employed people who do not have a pension scheme through work or people who’s employer does NOT offer a pension scheme to their employees.
The payments are usually subject to tax relief up to a certain amount which makes them desireable especially with self employed for tax relief reasons.
The payments are usually subject to tax relief up to a certain amount which makes them desireable especially with self employed for tax relief reasons.
Why invest in your pension.
The purpose of investing in your pension is for the fund to grow over time, BUT pensions can go up & down so be aware of this when deciding how much you invest in your pension. It’s always best to seek professional advice & we are happy to walk you through this process so you can best be informed as it is always best to know what funds are best to reflect the amount of risk you are OK with at certain periods of your life. A younger person might decide to have a higher risk when there young & an older person may decide on funds with very little risk. High risk can result in high returns but it is important that you have a good balance that reflects your own individual circumstances.
What happens to my personal pension when I retire?
You can choose to take benefits from your pension between the ages of 60 – 75 years, but if you become seriously ill before then you may be able to get this at an earlier stage.
How do I get at my pension money?
You have 3 different options & sometimes it is a mixture of all 3 below depending on your own individual circumstances & also how the tax implications of the options below best suit you at the time. As always, it is best to speak to one of our financial advisors who will be happy to advise & help you.
3 options or a mixture of all 3.
1. A taxable cash sum.
2. A tax – free cash sum
3. A regular income for the rest of your life, typically known as an annuity.
Depending on your circumstances you may take a mixture of all of these options. There are lots of rules about how these different options work including minimum and maximum amounts and tax implications. When you are ready to think about your retirement options then your Financial Broker will be able to help you make sense of what the right option for you is based on your individual circumstances, or, you can take a look at the At Retirement section which gives you more information.
If you would like pensions advise or help with any of the above, please feel free to call us to arrange to meet one of our pensions experts our offices in Meath or at your home at no extra cost.
We understand that there is a lot of information you need to consider & we believe in knowledge is power when it comes to choosing the right policy for you & your family.
If you feel you have more questions you need answering, why not check out our Pensions FAQ'S or contact us today.
If you feel you have more questions you need answering, why not check out our Pensions FAQ'S or contact us today.
