Pensions

Is there anything worse than growing old?

  • Yes! NOT growing old or,
  • Growing old without the funds to enjoy it!

The good news is that we are living longer, but for many of us, this means that whatever resource has been built up, must last longer!

In retirement most couples have to depend on a combination of 4 distinct categories of income:

  • State Pension
    • This is currently €230.30 per week, payable from age 66. In 2028 that age will be 68.
  • Occupational/Private Pension Scheme
    • There are many tax breaks available to encourage you to fund this.
  • Private Assets
    • it’s always a good idea to have a “rainy day” fund, however this is generally purchased with after tax income, and any profit is subject to tax on disposal. Not normally as tax efficient as Pension Fund
  • Part/Full time employment
    • This is hopefully a last resort, but will depend on the strength of the previous three options. Many older people do not wish to have to work! Wouldn’t it be nice to have a choice.

The State Pension, is funded from PRSI receipts annually! Currently there are 6 people working for every 1 retired. In 2050, it is expected to be 2 working for 1 retired.  Can the State afford to continue paying this pension, and at what level?

Retirement age is increasing, if you were born in 1954 or earlier, you will receive State Pension at age 66. If born between 1955 and 1960 you’ll receive benefit at 67, and after that, at age 68!

If you are turning 55 in 2016, you can expect State Pension at age 68!!

Life Expectancy in Ireland, at present, is male 78 and female 82.

There are over 450,000 retired people in Ireland.

Pension Funding

There are generous Income Tax Reliefs available on personal contributions to a pension fund. Employer contributions to a Company Pension are also tax deductible, with no Benefit in Kind.

Growth on Pension funds are free from Income/Capital Gains Tax/DIRT.

If you are Self Employed, at Retirement, you are entitled to a Tax Free Lump Sum of 25% of your Retirement Fund, up to a maximum of €200,000.

  • Click here for Maximum Funding Limits
    Self Employed limits for Tax relief
    Net Relevant
    AGE Earning %
    Under 30 15
    30-39 20
    40-49 25
    50- 54 30
    55-59 35
    60+ 40
    Earnings capped at €115,000

    Occupational Pension Scheme Sample, Salary %
    Male Male Female Female
    AGE Retiring 60 Retiring 65 Retiring 60 Retiring 65
    30 72% 54% 67% 49%
    35 86% 63% 80% 58%
    40 108% 76% 100% 69%
    45 144% 95% 133% 86%
    50 216% 126% 200% 115%
    55 432% 189% 400% 173%
    Fund capped at €2m
    Assumes no retained benefits and at least 10 years service at
    Retirement age