Pensions for Beginners

What is a pension?

A Pension, simply put, is a long-term savings plan to build up a lump sum of money for you to live off in retirement.

Why should I save into a pension?

To ensure you can live comfortably in retirement, as the state pension alone may not allow you to do so. Most experts suggest that you need a pension of at least half your pre-retirement income to live comfortably in your retirement years.

Tax relief is another reason to save into a pension. You will receive income tax relief on contributions made to your pension. This means if you pay tax is 20% a €200 pension contribution each month will only cost you €160 after tax. If you pay tax at 40%, a €200 contribution will only cost you €120 after tax

State pension ticking time bomb

The State Pension is paid out of taxes collected by Revenue, and currently there are five workers to every one person over the age of 65. However, by the year 2051 this will fall to just 2.3 people for every one person over...

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PRSAs (Personal Retirement Savings Account)

Pension Terminology

PRSA – Personal Retirement Savings Account (which is a type of pension).

Risk Level – Each fund has a risk level attached to it which is a guide how risky the fund is, a higher number mean a higher risk and a lower number means a lower risk. The scale is generally 1 to 7.

Tax Relief – Is a tax deduction on your pension contributions. It is an incentive to encourage people to save into their pensions.

Contribution – These are the payments you pay into the pensions fund they can be made in lump sums or recurring.

What is a PRSA?

A PRSA is an account you can use to save for your retirement. You can make lump or recurring payments into a PRSA, and these are usually tax deductible. A PRSA can be invested into different types of funds with different risk levels (higher risk means a better chance of high returns but a higher chance of losing your money and lower risk means lower returns but less chance of the fund decreasing.)

Can anyone get a...

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