Should I start or restart a pension?9 reasons pensions make sense

The earlier you start paying into a pension the more time it has to grow tax free. The tax incentives are the main benefit, which of course depends on your marginal rate of tax that you pay. You can start off small and increase it in time when you can afford it but the most important thing is the get it started! 

1. WE’RE ALL LIVING LONGER

 Thanks to healthier lifestyles, plus advances in medical treatments, people are living much longer these days. So, to make sure your money doesn’t run out, you’ll need to build a bigger pension fund.
 

2. COULD YOU SURVIVE ON THE STATE PENSION ALONE?

 At approx. €253.30 per week, your State pension may not be sufficient. So, unless you have an additional income when you retire,  you may not have enough money for your retirement needs.

3. YOUR PAYMENTS CAN GROW TAX-FREE

The money in your pension plan can currently grow tax-free – so it should have the potential to grow faster than in other types of savings plans that are subject to tax.

 4. DELAY COSTS MONEY

 Providing yourself with the retirement income you’ll need means building up money in your pension fund. But, the longer you wait before starting your plan, the larger the payments you’ll need to pay.

 5. POTENTIALLY BENEFIT FROM THE ‘DOWNS’ AS WELL AS THE ‘UPS’

Your regular contributions can benefit from periods of stock market volatility – particularly in the early years.
When investment values are low, you can buy more units with your contribution than you could have when unit prices were higher.
If the market subsequently recovers, then all these units can benefit from this recovery – making stock market volatility work in your favour.
 

6. IF YOU MOVE JOBS, YOU CAN TAKE YOUR PLAN WITH YOU

If you change jobs, you can take your pension plan with you.
 

7. HOW ELSE CAN YOU PROVIDE FOR YOUR OLD AGE?

 Any money paid into a pension plan may be eligible for tax relief. No other form of saving qualifies for this benefit. A pension plan really is the most tax efficient way to save for your old age.
 

8. IT’S NEVER TOO LATE

 Even if you’re approaching retirement, it may still be worth paying money into a pension plan, as you’ll be setting aside something for the future.
 

9. YOU CAN DRAW A TAX-FREE CASH SUM AT RETIREMENT

 When you retire, you can currently take part of your pension fund as a tax-free lump sum (subject to a lifetime limit of €200,000). This can enable you to do those things you’ve always promised yourself.

 

SEFS Ltd t/a Southeast Financial Services and Southeast Mortgages is regulated by the Central Bank of Ireland

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