October 14, 2019

It’s time to mention the P word

“Have you a Pension”?

“A pension? Nah, I’m still young, I'll get the old age pension so I'll be grand. Surely I will own a few houses by then.”  

This was the gist of a recent chat I had with a client’s son. My clients were encouraging him to start a Pension but he didn’t seem bothered and It got me thinking, why is there such inertia and lack of interest towards pensions?

My company Blueprint Financial Planning thus designed a survey focussed on pensions and distributed it online, we got 633 participants and the responses showed the level of apathy people have towards pensions.

Some standout findings from our survey include;

  • Of those with no pension 63% didn’t even know how to start one
  • 60% didn’t think their pension will provide enough for them in retirement
  • 50% didn’t understand how their pension was invested 
  • 65% of people have never spoken to their partner about their pension

So why should you contribute to a Pension? Well there are several compelling reasons to do so;

  1. What are you going to live on in retirement? Will the old age Pension really sustain your standard of living? Or do you want to stay working for ever? 
  2. Tax Relief – if you are a higher rate tax payer you can get tax relief on your contributions of up to 40% (i.e. for every €100 you contribute it could only cost you €60)
  3. Tax free lump sum – when you retire you can take at least 25% of your accumulated fund tax free (sometimes more depending on your circumstances)
  4. Investment returns are exempt from Tax unlike CGT on Property and DIRT on Savings
  5. Accumulated pension fund transfers to your estate on death

So, my advice to anyone out there who doesn’t have a pension (or who do have a pension but haven’t reviewed in ages) is to engage with an impartial financial adviser to learn about your options. In my opinion pensions can be over complicated in the media but remember they are effectively long-term savings plans with several benefits. Hopefully some day we will all be enjoying our retirement, alarm clock free, raising a glass and toasting a West Cork sunset. 

Disclaimer
Blueprint Capital Ltd t/a Blueprint Financial Planning 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 impartial financial adviser before entering any financial contract. Blueprint Capital Ltd t/a Blueprint Financial Planning will not be held responsible for any actions taken as a result of reading these blog posts.

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