Why a Pension ?

What is a pension?

A pension is a tax-efficient way to save for your retirement. It aims to provide you with a source of income in later life.

State Pension

The Government will pay you a secure regular income when you reach the State Pension age. This age is determined by when you were born. The amount you receive will depend on certain factors, including the number of years in which you’ve made PRSI contributions and the date you reach the State Pension age.

Why do I need a pension?

The earlier you start saving into a pension, the better chance you’ll have of achieving the lifestyle you want in later life. By the time you want to take your pension benefits you may want to work less or retire.

What makes saving into a pension so tax-efficient?

To encourage people to save for their retirement, the Government offers the following:

1. Tax relief – you’ll receive tax relief on your pension contribution at the basic rate, currently 20%. For every €80 you pay, you’ll receive €20 of tax relief, so you get a total of €100 paid into your pension plan. This increases to 40% for higher tax rate payers
2. Tax efficiency – money in your pension pot grows free from income tax and capital gains tax.
3. Tax-free lump sum – when you choose to take your pension benefits, you are normally entitled to take up to 25% of your pension pot as tax-free cash.

The law and tax rates may change in the future, and the value of tax relief depends on your individual circumstances.

How do I access my money?

If you’re aged 50 or over and have a defined contribution pension pot, there are various ways you can access your pension savings.