10 Reasons To Have a Pension Plan in Place (Part 1) Have you a Pension Plan in Place? We have noticed an increase in recent inquiries about pensions. Typically Pension planning is usually a good indication of the current economic climate. In good times pension funding is extremely tax efficient for both employees and employers. It is seen as a great way of saving for the future with the help of the revenue, and it remains one of the few areas that hasn’t been affected by recent budget measures. In order to hep people get their head around pensions we have put together a (2 Part) Pension is a smarter way to save. If you like saving money but hate paying tax, you will love retirement savings. Unlike a deposit account where you pay DIRT on any growth, with a pension you can actually claim tax back! • Tax relief available on contributions • Tax free growth on your pension fund • Regular income in retirement, potentially income tax free Your income could drop by up to 66% in retirement. When you retire, you’ll probably expect to maintain the same standard of living. However, unless you put a retirement pension plan in place, your income could drop by nearly 66% when you retire. The State Pension Contributory is €12,132*, but the average industrial wage is €35,874**. You need to save for your retirement to help avoid a big drop in income. * Source: Weekly State Pension Contributory 2016, www.welfare.ie. You may need an income for up to 30 years or more when you retire. With people now living longer, you may be retired for up to a third of your life and that’s why it’s so important to have a savings plan that ensures that the money you earn during your working life lasts your whole life. This means your retirement savings plan is arguably one of the most important savings plans you will ever contribute to. It can provide you with the security of a regular income to ensure a comfortable standard of living for your retirement. If you do qualify for the State Pension, you could be 68 before you receive it. The age of eligibility for the State Pension (Contributory) has changed and no longer starts at age 65. That’s potentially a three year gap in retirement income! • If you were born on or after 1 January 1955 the minimum qualifying State Pension age will be 67 • If you were born on or after 1 January 1961 the minimum qualifying State Pension age will be 68. The earlier you start contributing to your pension the better. The sooner you start your pension planning, the longer it has to potentially grow which could make a big difference to your retirement fund. The table shows how starting pension contributions early can have a significant impact on your retirement fund.