I’m 36 and a Private Client Manager here at Metis Ireland and I have a pension. I understand that it is important to save for retirement (I should its part of what I do), but in all honesty retirement seems so far away right now. I enjoy life in the here and now, but I have planned for my family’s future. I have plenty of monthly / yearly financial outgoings, priorities and responsibilities just like the next person. A pension isn’t top of the short-term list but its number one for the long term (15 + years).

 

A pension is non-negotiable for me, no other investment will give me an initial return of up to 66.66% before its even invested and then grows tax free when invested. I’m not saying I contribute the maximum allowed under revenue rules, but I do contribute regularly and often.

 

Retirement appears like a distant island for most but ask those that are inhabitants of the retirement Island and most would have done things differently (with the exception perhaps of recipients of public sector or the nearly extinct animal that is a Defined Benefit pension).

 

Something that I do know is that the pension landscape is changing in Ireland. Can I rely on the State Pension in the future? Will it be age 70 by the time I retire to be eligible for the State Pension? How much will the State Pension be worth to me? Your guess is as good as mine!!!

 

I do know that a retirement savings plan is the most important savings plan you will ever contribute to. It will hopefully provide you with the security of a regular income to ensure you can relax and enjoy your life and time on the retirement island.

 

If we stick to the facts, it is absolutely clear that pension savings are a good idea. Here are five reasons I would like to point out in the case FOR saving for your retirement island:

 

  1. You’ll Need an Income to enjoy life in retirement:

Your retirement could amount to as much as a third of your life! It makes sense to start saving now.

 

  1. Tax Relief on Your Pension Contributions:

Tax relief on your pension contributions is still available for all employees at their marginal rate of tax (max 40%, so if you contribute €1,000 it may only cost you €600). A €600 cost to you with €1,000 invested = 66.66% initial return on investment.

 

We don’t know what the proposed Pension reform will look like yet so why not make the most of this window of opportunity and save what you can to benefit from the current generous tax relief, while it’s still available.

 

  1. Tax Free Growth on Your Pension Savings:

Under current legislation your pension savings will grow tax-free (where as saving plans and deposits carry Exit/DIRT tax.) This, combined with your tax relief on your pension contributions, makes a pension plan one of the best saving options available today.

 

  1. Lump sum at Retirement

You can take 25% of your pension as a Lump Sum. The first €200,000 of which is Tax-Free from your final pension fund when you retire. This very attractive benefit is not available on any other savings plan.

 

  1. Don’t rely on anyone else when it comes to your lifestyle

How reliable is the current State Pension? What age will you be when you receive it? How much will you receive? What changes are coming in the Pension reform. Don’t leave your retirement planning up to government policy. We all wish we had a Public Sector pension, but we can’t all be so lucky.

 

Life is not a dress rehearsal – So what are you waiting for? It’s never too late!!

Please tune into my next blog, where I will discuss the important considerations for you when thinking about starting a pension. I will shed light on Revenue allowable Contribution Levels, Allocation Rates and Annual Management Charges.

 

Keith Matthews
Private Client Manager

 


 

 

Disclaimer

Metis Ireland Financial Planning Ltd t/a Metis Ireland is regulated by the Central Bank of Ireland.

All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified independent financial adviser before entering any financial contract. Metis Ireland Financial Planning Ltd t/a Metis Ireland will not be held responsible for any actions taken as a result of reading these blog posts.

Disclaimer


Metis Ireland Financial Planning Ltd t/a Metis Ireland is regulated by the Central Bank of Ireland.


All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified independent financial adviser before entering any financial contract. Metis Ireland Financial Planning Ltd t/a Metis Ireland will not be held responsible for any actions taken as a result of reading these blog posts.