Across Ireland, workers are waking up to a tough truth: many of us are pension poor. Despite long careers, steady incomes, and in some cases good bonuses too many people face uncertain futures because retirement planning has been delayed or overlooked.
Imagine yourself at 67. Do you see a comfortable life with time for travel, hobbies, and family? Or do you see financial stress, restricted options, and dependence on the State pension alone? The life you want in retirement depends on the actions you take now. Planning early, making informed decisions, and using the right pension tools can give you freedom later. If you keep putting it on the long finger, you’ll end up playing catch up. Life is not getting cheaper, so where do you start? This blog will help you understand where you stand, what options exist, and how to secure the life you want in retirement and the future you deserve.
What is the State Pension, who gets it and how does it work in Ireland?
The Irish State Pension is a weekly payment from the government to people who have reached retirement age. Currently, the age is 66, with scheduled changes in the coming years.
There are two main types:
- Contributory State Pension – based on your PRSI contributions. If you have built up enough contributions, you qualify regardless of your income or savings.
- Non-Contributory State Pension – a means-tested payment for those who don’t have sufficient PRSI contributions.
In 2025, the contributory pension is worth just under €290 per week. While helpful, this income alone rarely covers housing, utilities, healthcare, travel, and everyday living costs. Ireland is not getting cheaper. Last week I took my niece out to the cinema, for some food and an ice-cream in Dublin, before I knew it I was €90 down. Spending time with her was worth every penny, however I couldn’t help think that was a third of the weekly state pension gone in one simple outing. That is why most financial advisors stress the importance of additional pension planning.
Can I increase my State pension by deferring it?
Yes, under recent rules, you can defer your State Pension until age 70. By delaying, you may receive higher weekly payments when you eventually start drawing it down.
This option suits people who want to reduce tax exposure in the early retirement years or those still working and not yet needing the income. However, deferral isn’t right for everyone. Health, life expectancy, and personal financial needs must be considered before deciding. At Dolmen our pensions experts will have a thorough conversation and advise you on the what suits your situation.
How much do I need to save for retirement / will I have enough money?
This is the most common question Irish workers ask. Unfortunately, there is no single answer because every person’s retirement goals differ. A useful rule of thumb is to aim for retirement income equal to two-thirds of your final salary. That figure includes your State Pension and any private pension savings.
For example, if you earn €60,000 per year, you should target €40,000 annual retirement income. With the State Pension covering around €15,000 per year, you would need an additional €25,000 from your own savings.
Calculators and pension reviews can give you a personalised figure, helping you decide whether you are on track or need to adjust contributions.
When should I start a pension? / Is it too soon to start?
The simple answer: the earlier, the better.
A pension works best when you give it time. Contributions made in your 20s or 30s have decades to grow. Compound interest turns even modest savings into substantial funds.
For example, saving €200 per month from age 25 could deliver a far larger pension pot than saving €400 per month starting at 40. Starting early means you need to save less each month to reach the same retirement income. That said, it is never too late to begin. Even if you start later in life, tax relief and top-up contributions can still make a real difference.
What are the benefits of taking out a private pension?
Pensions are more than just savings accounts. They offer specific advantages designed to reward people for preparing for retirement.
- Tax relief on contributions – Depending on your income tax rate, you can save 20% to 40% on each contribution.
- Tax-free growth – Investments within your pension grow without capital gains or income tax.
- Employer contributions – Many workplace pensions include employer top-ups, boosting your savings automatically.
- Tax-free lump sum – At retirement, you may take a significant portion of your pension as a tax-free payout.
Together, these benefits make pensions one of the most effective savings tools available in Ireland.
What pension options are available?
Irish workers can choose from several pension types:
- Occupational Pensions – Set up by employers, often with contributions from both employer and employee.
- Personal Pensions – Designed for self-employed people or employees without a company scheme.
- PRSAs (Personal Retirement Savings Accounts) – Flexible, portable pensions that suit people who change jobs often.
- AVCs (Additional Voluntary Contributions) – Extra payments made to boost workplace pensions.
The right choice depends on your career, income, and long-term goals. An advisor can help you compare options and select the most suitable structure.
Can I boost my pension before I retire?
Yes. Even if retirement is close, you can still increase your pension savings.
- Make AVCs to top up an existing occupational scheme.
- Use lump sums if you receive a bonus, inheritance, or redundancy payment.
- Maximise tax relief by contributing within annual Revenue limits.
Boosting your pension in the last 10 years before retirement can significantly improve your overall income. Every additional euro saved benefits from tax relief and long-term compounding.
How much can I take as a tax-free lump sum?
At retirement, most people can take up to 25% of their pension fund as a tax-free lump sum, subject to limits.
The current maximum is €200,000 tax-free. Amounts between €200,000 and €500,000 are taxed at 20%. Anything above that is taxed at your marginal rate plus USC and PRSI.
This lump sum can be used to pay off debts, support children, or fund early retirement plans. However, taking too much too soon can reduce your long-term income, so it should be planned carefully.
What are my options with the balance beyond the lump sum?
After you take your tax-free lump sum, the remaining balance can be managed in two main ways:
- Annuity – A guaranteed income for life, purchased from an insurance company. The amount depends on interest rates and your age at retirement.
- Approved Retirement Fund (ARF) – Keeps your money invested, allowing flexible withdrawals over time. You maintain ownership but take on investment risk.
The right choice depends on whether you prefer security or flexibility. Many people combine both, using an annuity for essential expenses and an ARF for extras.
How do I review or improve my pension’s performance?
Pensions are not “set and forget.” Regular reviews help ensure your money works as hard as possible.
Check:
- Fund performance – Are your investments delivering good returns compared to benchmarks?
- Charges – Are management fees eating into your savings unnecessarily?
- Risk profile – Is your fund too risky or too cautious for your age and goals?
Meeting with a pension advisor every few years helps you adjust contributions, switch funds if needed, and stay on track for your retirement targets. As author of “The Behaviour Gap” said nothing is set in stone, not only should you review your pension and financial goals, but they should change.
What’s the new auto-enrolment pension scheme (“My Future Fund”) all about?
From 2026, Ireland will introduce auto-enrolment pensions under the scheme known as My Future Fund.
Employees without an existing pension will be automatically enrolled. Contributions will come from the employee, their employer, and the government. This system mirrors successful schemes in other countries, aiming to reduce Ireland’s pension shortfall.
Auto-enrolment is a major change, but it deserves its own full discussion. We will cover the details, benefits, and considerations in a future blog post.
Pensions, What should I do?
Ireland faces a pension challenge. Too many workers risk retiring on limited State support, with few other resources to fall back on.
The good news? It’s never too late to act. Whether you are just starting your career, halfway through, or nearing retirement, there are steps you can take now. By reviewing your options, making the most of tax relief, and boosting your savings, you can build a retirement that reflects the life you want.
At Dolmen Insurance, we’ve been guiding people through these choices for over 25 years. Áine Derham, our director and one of Ireland’s leading Life Insurance and Pension advisors, and her team of pensions experts are ready to help you take the next step whether thats a personal pension, directors pension or group pension scheme.
Disclaimer
The information in this article is provided for general guidance only and does not constitute financial or legal advice. While every effort has been made to ensure accuracy, details of Ireland’s Auto-enrolment scheme may change as the Government finalises its rollout. Readers should not rely solely on this content when making financial decisions. For personalised advice tailored to your circumstances, please contact Dolmen Insurance or a qualified financial adviser.
