Your Pension is the most important aspect of retirement planning. Offering generous tax reliefs and the power of tax-free growth compounding over several years makes it key to providing for your financial future.
At NPFS Advisors we specialise in advising on all types of Pensions both pre and post-retirement.
While the state pension in Ireland provides a basic level of income support in retirement. Could you live on it alone?
Relying on the State pension might not be enough to sustain you well into your retirement, and therefore it is highly likely you will need another pension arrangement in place to support you when you retire.
What is a private pension scheme?
A pension scheme (or pension plan) is a long-term savings plan that helps you save for your future retirement. A pension plan allows you to make regular payments and/or transfer one-off lump sums into a fund for retirement. The amounts saved into your pension are called ‘contributions’.
At retirement you will have the options to take a tax-free lump sum from your scheme. The balance can be invested in an Annuity or an Approved Retirement Fund (ARF).
An annuity is effectively an income payable for life.
An ARF allows you to continue to invest your pension monies after retirement and draw an income subject to minimum withdrawals.
Private Pensions come in various forms but ultimately all do broadly the same thing when it comes to retirement. There are various different pension schemes which are suitable for different classes of employees, self employed individuals and company directors. We have listed below a brief explanation of each.
Executive Pension
This is a pension plan designed for company owners, directors, and senior management. This option is ideal for you and your employer to make tax-free contributions and if you want to take a tax-free cash lump sum – depending on length of service, salary, and fund size.
Personal Pension Scheme
A personal pension is suitable for self-employed and employees whose employer does not offer an occupational pension.
Personal Retirement Savings Account
A flexible and portable retirement savings account you can bring with you when you change job. Suitable for employees/self-employed and company owners.
Personal Retirement Bond (PRB)
With a PRB, when you leave a pension scheme, the value of your fund is invested in a bond in your own name which you can benefit from at retirement. Also, offers flexibility regarding access from age 50 if required.
Defined Benefit Pension
A defined benefit (DB) pension scheme is one where the amount you’re paid at retirement is based on how many years you’ve been a member of the employer’s scheme and the salary you’ve earned when you leave or retire.
