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PENSIONS How would you like a GUARANTEED growth rate in your pension?
Available Now... Interested in a GUARANTEED growth rate in these uncertain time ? Interested? Read on... How about a pension fund that pays GUARANTEED growth rate of 5.35% EVERY year for 5 years* ?
Could you live on the state pension of €230.30 per week? Thats why retirement planning is very important !
We have recently been quoted a fact from the life companies that up to 75% of people have stopped paying into their pensions... There are many factors which cause this
Also, you may be unaware that the funds are reducing in value due to a combination of the above facts AND increases in charges eg.: Pension Levy Etc Etc
How about a pension fund that pays GUARANTEED growth rate of 5.35% EVERY year for 5 years* ?
Interested ? Click here to request some further information Contact Us It’s
always a great time to plan for retirement regardless if you think its too late or too early,especially when as of Jan 2011 the state contributory pension in Ireland is ONLY €230.30 per week. We all heard this before and
respond with a yawn. The quality of Life in retirement can be much
improved by a list of advanced planning.
Interested? Why not read on... What you need to know about your Pension First, a reminder about why you started your pension in the first place. Tax Relief: Pensions are the only way for most of us to reduce the amount of tax we pay. For every €1000 you pay into your pension it actually only costs you €590 in your take home pay. Also, if your employer pays say €100 pm into your pension it does not trigger an income tax charge saving you between €20 and €47 in income tax when compared with receiving the equivalent payment as salary. This is not all. People often forget that pension funds grow tax free. Here is how alternative investments are taxed: Bank Deposits: Pay DIRT tax on all growth of 25 or 30% depending on how often interes is credited. Sale of Shares, Property or Bonds: Pay Capital Gains Tax at 30% Income from Shares, Property, Bonds: Income tax + PRSI 20-47% plus further 2-6% in levies Your pension fund may hold bank deposits, shares, property and pays none of the above taxes. There are many ways of saving for your retirement but the tax savings described above mean that pensions are the most effective way of doing this. What happens when I retire Self Employed / Company Directors / Employees iro ‘AVC’ Funds only 25% tax free – most people take this initially. With the remaining 75% you have 2 options:
The ARF option is increasingly popular for three main reasons. You have more control over when you take money from the fund. Annuity rates are currently low. On death the ARF fund passes to your next of kin while the annuity may cease on death, depending on the type of annuity. It is essential however to take advise from a professional when deciding whether annuity or ARF is right for you. Employees / Company Directors (have above options also) On retirement the amount you receive tax free depends on the number of years service you have and the age at which you retire. If you have 20 years service and retire at the scheme normal retirement age (often 60 or 65) you are entitled to 150% of your final salary tax free. The remainder of your fund must be used to buy an annuity. I have heard a lot about pension funds losing money recently how does this affect me? Most of us are invested in medium risk funds which are mainly composed of investments in shares, property and bonds. We all know that shares and property have experienced falls in values recently and this has affected pension funds. However pension funds have recovered a lot since the crash which started in 2007. The average return on a managed fund in 2009 was 29.7% (source Zurich Life/Moneymate) Some pension investors stopped contributing to their pensions in 2008 because of falling values and have not restarted contributions. This is a worst of both worlds scenario – experiencing the crash and missing the recovery. This is a keen reminder to commit to your chosen investment strategy and ride out the troughs by maintaining regular payments to your pension. If you are retiring in the next few years however you may wish to consider increasing your pension contributions (in a low risk fund if you wish) to make up for losses which you may not have time to make back. I don’t want my money at risk – I prefer the security of having it in the bank. Firstly you do not have to take on any risk with your pension fund if you do not want to. All pension providers offer bank deposit type funds which are guaranteed not to fall. Many of these companies are in a much better solvency position than the banks at the moment. Pension Charges are very high – by the time charges are paid its hard to make a decent return. The pension market has never been more competitive and this is an ideal opportunity to shop around for the lowest charges available. Older pensions in particular often have high and complicated charges. You should speak to a pensions professional who can analyse your pension to see if you could reduce charges by switching to a different provider. To give a broad idea of charges the Government Approved PRSA has a charging structure of 5% premium charge and 1% pa fund charge. Some pensions currently available have lower charges that this. Example of how pension charges can work: You invest €100 into a pension each month Allocation rate: this could be say 97% which equates to a €3 charge. Bid Offer Spread: essentially another entry charge. A 5% bid offer spread on a premium allocated at 97% would increase the entry charge to €7.85 (97% x 95% = 92.15% or a 7.85% entry charge) Policy Fee: a monetary amount e.g. €3.50 per month So on the monthly premium of €100 there are charges of €11.35 in this example Annual Management charge 1.65% pa. This is on the total fund value so on a fund of €10,000 would be €165 over the year. Not all pensions are the same. It is not difficult to see how a pension with high charges can take some time just to ‘break even’. Modern pensions however are available with much lower charges so speak to your adviser today to get a better deal. I have been made redundant – what are my options with my employers pension scheme. On leaving a job for whatever reason you should request your Leaving Service Options from your employer or pension trustee. The options are usually as follows:
All of the above qualify for tax relief on personal contributions at the following rates.:
* 5.35% pa less charges of 1% pa Annual Management Charge and .6% levy for 3 years For further information click here |
last updated: January 3, 2012
