8 Good Reasons why I should provide for my Retirement through a Pension
Planning for your financial future will give you peace of mind today. This week, our Expert Retirement Planning Adviser, Denis Murphy, Premier Financial Services, discusses why funding a pension is so important.
1.What will the state pension be in the future?
The State Pension (Contributory) personal full rate for a single person is currently €233.30 per week.
Demographic changes in Ireland, will put pressure on government finances as the cost of state pensions and health care for the elderly increase.
2.State pension age increasing to 68
Legislation is now in place that will increase the age at which the state pension becomes payable in the future to age 68 based on your date of birth.
3.Life expectancy
Life expectancy for those born in Ireland is now 78 years for males and 82 for females. Your retirement savings may
need to last for up to 30 years after you finish working.
4.Income tax relief
Income tax relief is still available on contributions made personally to a pension. This relief is available on up to 40% of the contribution for a top rate tax payer, or 20% for a standard rate tax payer.
5.Tax Free Retirement Lump Sum
Tax free retirement lump sums are available when taking retirement benefits. You can
take 25% of your pension fund as a retirement lump sum or with a company pension you
can instead choose to take a retirement lump sum of up to one-and-a half times your final salary, depending on the length of time employed. The maximum total tax-free
amount is €200,000. A retirement lump sum of between €200,000 and €500,000 is subject to standard rate income tax, currently 20%.
6.Approved Retirement Fund (ARF)
The ARF option has been extended to all members of Defined Contribution (DC) company pensions. The ARF option gives what many individuals want in terms of
- control over income drawdown
- control over investment options
7.Gross Roll Up
Pension funds are exempt from Irish income and capital gains taxes and therefore the growth is Gross until drawdown at retirement.
8.Investment
Pensions allow for a wide range of investment options to suit the risk appetite of every client.