This depends on the age you start contributing, whether your employer also contributes to your pension plan and what amount of pension income you want for your retirement. See our online pension calculator which will give you some idea of the amount required.
Impartial advice for your financial future
Self Managed Pensions
The increased flexibilty introduced in pension legislation has allowed individuals to take more control over the mangement of their own pensions. This is a fundamental change away from the traditional Managed or With Profit Funds.
Despite the ever increasing range of various pension funds available in the market place, some people prefer to have more control over their pension by choosing their own investments. Depending on your situation, there are a number of self managed options open to you.
Self Invested Personal Pensions (SIPP)
Self-employed invididuals can opt for a Self Invested Personal Pension (SIPP). This is a normal personal pension with an option to invest in assets of your choice.
Self Directed or Small Self Administered (SSAP)
Company directors or employees can opt for a Self Directed Pension with an Insurance Company or a Small Self Administered Pensions (SSAP) with a Pensioneer Trustee. Both company options offer essentially the same service, although they have different charging structures. In addition, there may be more restrictions on asset choice using the insurance company option.
Investment Restrictions
There is a distinction between an asset held by an individual's pension fund and one which they hold personally and this is primarily down to the favourable tax treatment which pension funds enjoy. For this reason a number of restrictions apply to assets which a pension fund may invest in.
- All property investment must be at arms length. You or any member of your extended family may not have use of the property.
- Investment in pride of possession articles is prohibited. These include items such as works of art, gold bullion, cars.
- Foreign property ownership is strictly controlled.
For one person schemes, it is possible to borrow to fund property purchases.
For a full list of investment restrictions, read this document from the Revenue Commissioners.
Deposits
As well as shares and property, self managed pensions can also place funds on deposit with a wide range of banks.
Did you know?
- SSAPs require the appointment of a Pensioneer Trustee. The pensioneer trustee charges an annual fee which will be agreed when the pension is set up. Failure to pay this fee may result in the trustee resigning thus rendering your pension fund void.
- Investing in a prohibited asset will result in the asset being withdrawn from the pension fund. This will result in an immediate tax liability and will leave any future income received by the asset liable to tax.
- The vast majority of money invested in SSAPs over the past decade was invested in property. Like any investment it's important to be diversified to ensure that not all eggs are kept in the one basket.
For more information
Please contact us, call 1890 299 299 or email pensions@onefinance.ie.
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Frequently Asked Questions
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How much should I save for my pension?
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Do I need Additional voluntary contributions (AVCs)?
Additional voluntary contributions (AVCs) are extra payments you choose to make to your pension fund. You may need them if you find out that your existing contributions may not be enough to give you your expected income at retirement.
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What happens to my pension if I die before I retire?
This depends on whether you have an employer pension plan, a personal pension plan or a personal retirement savings account (PRSA). If you have an employer pension plan there will be rules about what the fund will pay out to your dependants (people who rely on you for financial support) if you die ‘in service', (that is, while you are still employed). These are called ‘death-in-service' benefits. Death in service benefits allow for a tax free lump sum and an annuity to be paid to a surviving spouse. The maximum tax free lump sum payable is 4 times your salary. Ask your employer for information about what your plan provides. You should take this into account when deciding how much life insurance cover you need, or when making a will.
If you have a personal pension plan or PRSA, the value automatically passes to your estate for the benefit of your dependants if you die before you retire. You need to consider the value of your pension plan when deciding how much life insurance cover you need, or when you make a will. -
What pension do I get if I retire early due to ill health?
Some employers provide an ill-health pension for their employees if they have to retire early because of illness. If your employer does not provide these benefits, you may want to consider taking out some form of salary protection insurance such as income protection insurance. This type of policy is not the same as a pension but it can replace part of your income for as long as you are unable to work due to ill health.
If you have a personal pension plan or PRSA and If you become permanently unable to work due to ill-health and have to retire, you can immediately draw on your pension plan, no matter how young you are.
As with voluntary early retirement, the amount you get will be much less than if you contributed up to your original expected retirement age because you have paid fewer contributions and these have been invested for a shorter time. -
I've just been made redundant. What are my options with my pension?
Whenever you leave employment through voluntary means or by redundancy, you will usually receive a letter from your former employer outlining your options concerning your pension. You should study them carefully as this is an important decision for you to make. The options open to you include transferring your fund to a new employer's scheme if you have found a new position, transfer it to a Buy Out Bond which transfers your fund from your former employer's responsibility and into yours or transfer it to a PRSA. You can also choose to leave the fund under the care of your former employer but unless it is a Defined Benefit Scheme, you should give careful consideration to moving it. In Ireland there is no pension protection scheme and pension schemes may become insolvent leaving you with no pension. It is important that you consider all of the facts carefully if you find yourself in this position.
