How good is your pension?
Did you know that less than 65 percent of Irish professionals currently have a pension plan? That might not sound too alarming, but the current State pension represents a substainale decrease for many in full-time employment.
- Current state pension is €243.80 per week, supplementing your income at Retirement is a smart thing to do.
- Delaying starting could double the cost of your pension contributions. Evidence shows that starting early is a good move as it will give your money more time to grow. This is based on the concept of 'compound interest'. “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.” (Albert Einstein).
- It's important to know where your pension is being invested. Normally contributions are invested in a pension fund (which can be low, medium, or high risk, depending on your personal risk profile). Each type of fund has an investment return rate. An example of a low risk fund would offer returns of approximately 1-2 percent per annum. High risk funds would offer returns of approximately 8-12% per annum.
- The best benefit is that your pension contributions are allowable for tax relief, the growth within a pension fund is tax free and you receive a tax free cash lump sum when you decide to drawdown your pension. Start planning your retirement now and your future self will thank you.