Pensions

Personal Pension Plan

Pensions are designed for those who are self-employed or employed and wish to make financial provision for when they retire. There are lots of pension and financial brokers are best suited to guide you trough the various options. In there basic form pensions are a tax efficient way of saving to your retirement.

Retirement can be taken from between 60 to 75 years of age.

You get many investment choices, so you can be as adventurous or as conservative as you like. And you can switch your investments if your circumstances change.

A pension, is a pension plan issued by a life insurance company to an individual. There are no employer contributions made to the pension plan and as the name suggests, the plan is owned by the person who contributes to it. This type of pension product is most suitable for the self-employed.

Personal pension plans may be suitable for employees who are not in pensionable employment (i.e. not included in an occupational pension scheme by their employer), however depending on a number of factors, a PRSA may be more suited to an employed individual. See the PRSA page for comparison to personal pensions.

Tax Relief

Contributions made to a pension plan are tax deductible for the individual against net relevant earnings. The current maximum limits for income tax relief are as follows:

Age
$Maximum Tax relief As % of Earnings (NRE)
< 30
$15%
30 – 39
$20%
40 – 49
$25%
50 – 54
$30%
55 – 59
$35%
>60
$40%

The limits above are capped to a maximum earnings ceiling of €115,000 for 2016*. In addition, for some professional sportspeople, a higher rate applies regardless of age.

It is possible to backdate pension plan contributions paid in the current tax year to the previous tax year, once the contribution has been made before Oct 31st. It is also possible to carry forward any excess contribution made, in order to gain tax relief in future years.

*source Revenue.ie

What can I invest my pension in?

There is a wide selection of potential investments for pension investment. As the pension is owned by the individual, you have control over your investment strategy, which cannot be said for members of occupational schemes who are limited in their investment choice.

The personal pension plan is issued & administered by an insurance company. Concentrating contributions to one personal pension plan may give a higher allocation rate and reduction in charges. It may also be desirable to have a number of plans with different providers if there are a number of investment products which the pension investor wishes to invest in.