We are all living longer and leading more active lives in retirement. Most people who retire at age 65 can now expect to live at least another twenty years. Planning for our retirement has become a more important part of financial planning.
Your retirement income will most likely come from a combination of sources. These could include business assets, your investment property assets, your savings and investments as well as your pension investments. MDL Financial Services Ltd holds appointments with all the life and pension companies which we feel offer value, innovative products and suitable fund types for our client. Our experienced members of staff will formulate a complete and suitable plan for you and your family, taking account of your existing assets and personal circumstances.
The State will provide you with a basic level of income ( €209.30 per week) provided you qualify. You may supplement this pension income through any of the following pension vehicles:
- Personal Pension Plans
- Personal Retirement Savings Account
- Occupation Pension Schemes (Company Pension Schemes)
- Small Self-Administered Schemes(SSAS's) and Self-Invested Personal Pensions(SIPP's)
At MDL Financial Services we will more than happy to guide you through each pension type.
1. Personal Pension Plan
A Personal Pension Plan is a tax efficient method of saving for your retirement. You can choose the level of contributions you wish to make and how you wish to invest these contributions. We at MDL Financial Services Ltd, will be happy to advise you based on your attitude to risk and length of time to retirement.
You can set up a Personal Pension Plan if you are self-employed or an employee not included in a company pension scheme. Personal Pension plan-holders can avail of tax relief on their pension contributions at their highest tax band provided that these contributions do not exceed the following limits:
- Age % of Net Relevant Earnings
- Up to 30 years of age 15
- 30-39 20
- 40-49 25
- 50-54 30
- 55-59 35
- 60 years and over 40
At the point of retirement, Personal Pension plans offer substantial tax advantages. The policyholder is entitled to take 25% of their retirement fund as a tax-free lump sum, the balance of the fund can be used to purchase an annuity(guaranteed pension for life) or an Approved (Minimum) Retirement Fund which allows you to retain total control of your pension assets.
2. Personal Retirement Savings Accounts(PRSA's)
A Personal Retirement Savings Account (PRSA) is an account or policy set up for an individual to save for their retirement. This policy type was introduced by the government, they have also outlined the charges and types of investment funds to be used.
PRSA's are designed to be portable and flexible. If you change employment, you can carry your PRSA to your new employer. Contributions are also flexible; you can increase, decrease of suspend pension contributions depending on your personal circumstances.
The maximum funding levels for tax relief are identical to those listed above for Personal Pension Plans.
If you are employed by a government body, it is possible for you to make an arrangement for an AVC without the need to set up the plan under trust. AVC(Additional Voluntary Contributions) are a tax efficient form of saving for your retirement. PRSA AVC's offer greater retirement options to you. They can give you scope to increase your entitlement to tax-free cash. they offer you the option to purchase an annuity(guaranteed income throughout your life) or an Approved Retirement Fund. Approved Retirement Funds (ARF's) allow you to keep control of your fund. it also gives you greater freedom to draw down money as and when it is required. You are now entitled to choose your own AVC PRSA Provider. Based on your attitude to risk and length of time to retirement, MDL Financial Services Ltd will be happy to recommend suitable investment funds and a pension company. Contributions can be relieved against tax at your marginal rate of tax.
If you are an employer and you are not providing a company pension plan for your employees, you are obliged by law to appoint a PRSA provider. We at MDL Financial Services Ltd, will be happy to assist you complying with this regulation.
3. Occupational Pensions (Company Pension Schemes)
Contributions are paid by your employer to a pension scheme on your behalf. In certain cases, the employee will be obliged to contribute a certain level of contributions before the employer will make an contribution on your behalf.
The majority of occupation pension plans today in Ireland are "Defined Contribution Schemes". This means that the level of contributions is known before you join the scheme. Final benefits from the scheme will depend on how much you have invested, the length of time invested as well as the investment performance over the period of time.
Both the employer and employee can avail of tax relief on the pension contributions.
Some employers included a Death In Service Benefit on their scheme. This cost is usually borne by the employer. This benefit is payable in the event that you die while still employed by the company.
If you are a propriety company director and you are taking a salary from your company, your company can make pension contributions on your behalf. There is an early retirement option from age 50 onwards. It can be a very tax-efficient way of extracting money out of the company, as well as a tax effective estate planning tool. We will be happy to advise you of these benefits and would recommend that you take taxation advice.
The retirement options tend to be more complicated on company pension schemes. At MDL Financial Services Ltd our experienced staff will be happy to discuss these options with you to ensure that you fully understand the options available to you.
4. Small Self Administered Schemes(SSAS's) and Self Invested Personal Pension Plans(SIPP's)
Small Self Administered Schemes products are available to company directors while Self Invested Personal Pension Plans are available to those who are self-employed and professionals.
Small Self Administered Schemes(SSAS's) product is available to company directors and key employees. A SSAS is established under trust by a company's directors. It provides a tax efficient vehicle in which a company's profits can be invested to provide retirement benefits for directors. It gives company directors the opportunity to maximise their pension funds prior to retirement by giving them control over their investment. You can control and choose your investments options including property, structured deposits, direct investment in stocks and shares.
Since the introduction of the Finance Act 2004, the trustees of SSAS's can now also borrow money in order to invest for the members benefit.
A Self-Invested Personal Pension(SIPP) product is available to company self-employed persons and professionals. It allows you to invest your pension funds in the manner you feel is most appropriate to your investment strategy. It offers you the opportunity to create your own investment portfolio for your retirement with the ability to invest in cash, bonds, equities, property or any other class or combination.
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