Ireland’s Guide To Money And Living

Planning for your pension

Pension plan

Photo: iStock

By Tiernan Cannon

New research conducted by Irish Life has revealed that only 46 per cent of working adults can avail of a company pension plan at work. Where these plans are available, 76 per cent of people are saving into a company pension. The survey also noted that nearly half of all workers who make savings into a group pension plan are aware of the amount that their employer pays into the plan, with a similar number understanding that saving into a pension is a tax efficient way to save for the future.

These figures would suggest that a sizeable portion of the population is unfamiliar with their pension options. So what are the main options available to you?

Occupational pension schemes

Also known as company pension plans, these are set up by employers and can provide a tax-free lump sum within certain limits, and pension income in retirement. These benefits will be based either on your final or career earnings or on the value of your retirement fund. The advantage of these schemes is that your employer contributes towards the cost of the benefits.

Personal pension plans

These are normally paid for by personal contributions, although employers can pay additional contributions to these plans. Personal pension plans can be obtained from financial services companies such as insurance companies and banks, and through financial advisers.

These plans also provide a tax-free lump sum, within certain limits, and a pension or other benefits at retirement. Personal Retirement Savings Accounts (PRSAs) and Retirement Annuity Contracts (RACs) are both personal pension plans.

State pension

In Ireland, the non-contributory state pension is paid to those aged 67/68 years and over, and is dependent on a means test. The non-contributory pension begins at €227 per week, rising to €237 for those aged 80 and over.

The contributory pension applies to those who have made sufficient social insurance (PRSI) contributions throughout their working life, and is not means tested. Rates are dependent on your PRSI contributions, but if you have 10-14 years you’ll receive €95.20 per week, rising to €238.30 per week for those with 48 years of contributions, with other benefits and allowances applicable in certain cases.

Both pensions are taxable, though this is unlikely if it is your only source of income.

For more detailed information on the various pensions available, consult the Citizens Information online guide to pensions.

When not writing about all things personal finance, You & Your Money's editor Conor Forrest enjoys reading, football and getting lost in an ocean of Wikipedia articles.