Managing your Pension

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Managing your Pension

Great you have started your pension, but are you managing your pension to ensure you are on track to reach your goal retirement income? Now is the time to review your contributions, maximise your tax relief benefits and take control of your future.

Ask yourself a question How much do I need when I retire?

See our easy to use pension calculator at here.

Our Expert Advisors are here to advise you on the best path to help you reach your retirement goals.

Managing your funds

Are you sure you are in the most suitable fund, according to your current needs and lifestyle? As it changes, it is important to review your pension to ensure you are in the most suitable saving, providing you with the best possible returns for your capacity for risk.   Our Expert Advisors are here to help you decide on the level of risk you want to take and which founds and assets you want to invest in.

Maximising your Contributions

Wouldn’t it be great to maximize your pension contribution while reducing your tax bills? If your income is taxable under Schedule E or Schedule D (typically employees), your maximum allowable pension contribution is related to your age and expressed as a percentage of your gross income.  The maximum gross income figure is capped at €115,000 – anything above this limit doesn’t qualify for tax relief.

This means that you can receive income tax relief (20% or 40% depending on the highest rate of income tax that you pay) up to the limits outlined below:

Tax Relief by Age Bracket

Under 30

30-39

40-49

50-54

55-59

60 and over

15%

20%

25%

30%

35%

40%

 

For example, if you are 42 and earn €50,000 per annum from employment, you are eligible to obtain tax relief against total pension contributions of up to €12,500 per annum (25% of your gross salary).

Income tax is dependent on individual circumstances; however, typically 40% would be applicable in this instance.

With 40% tax relief, a contribution of €12,500, will cost you €7,500 in your take-home pay.

To discuss your pension options, request a call back using the button below or contact 1890 300 303.

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Important Assumptions

For the purpose of determining the term over which pension contributions are made, we have assumed your birthday was exactly six months ago.

If your target retirement age is lower than the age at which the Social Welfare pension commences (age 68 if you are born on/after 01/01/1961, age 67 if born before this date but on/after 01/01/1955 and age 66 if born before 01/01/1955) the calculations allow for funding for this gap, in addition to the cost of the annuity.

You are entitled to a full Social Welfare pension of €248.30 per week as at March 2019 which is assumed to increase by 2.5% per year.

You are saving for the difference between the Social Welfare pension and your target monthly income in retirement.

We have allowed for inflation of your target monthly income of 2.5% per annum between now and your retirement date.

Any other private pension provision you may have in place has not been taken into account.

Your monthly pension contribution increases by 2.5% each year up until your retirement age and is invested in a pension plan with an annual management charge of 1% and a 5% charge on each contribution, in line with the Standard PRSA fees and charges maximum limit.

A Gross Investment Return of 4.2% per annum on your savings. This is not a forecast because the value of your investment may grow at a faster or slower rate than assumed and the value of your investment may be expected to fall from time to time as well as rise.

On retirement you purchase an annuity which escalates at 1.5% each year, has a 5-year guarantee and is payable monthly in advance. The annuity rate assumes a post retirement interest rate of 2% per annum and no spouse’s pension. The actual annuity rate will depend on the selection of dependant’s pension, guaranteed period and the escalation rate, as well as interest rates prevailing when the annuity is purchased.

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