10 Reasons to start a pension:
Why start a pension plan now?
(It’s
ages before I will retire)
When you are young, it’s all too easy to think that old age
and retirement are so far away in the future that you don’t
need to bother about them now. Yet, the earlier you start
your pension plan, the less it will cost you to build up the
pension that you will need.
That’s because the longer your money is invested, the more
chance it will have to grow - so the amounts that you pay in
during the early years have the potential to build up much
more than the amounts that you pay in later in life.
1. On average, 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 just €230.30 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. The taxman will give you a helping hand.
For every euro you pay into your plan, the
taxman will currently give you 20 cents back, so
it only costs you 80 cents. If you’re a higher rate
taxpayer, it’s an even better deal. You’ll currently
get 41 cents back, so each euro you pay into your
plan will only cost you 59 cents.
4. Your contributions 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.
5. Delay will cost money. To provide yourself
with the retirement income you will need means
building up money in your pension fund. But,
the longer you wait before starting your plan, the
larger the contributions you will need to pay.
6. 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
than all these units can benefit from this recovery
– making stock market volatility work in your
favour.
7. If you move jobs, you can take your plan
with you. If you change jobs, you can take your
pension plan with you, so you wont be tied down
to working for just one employer throughout your
career.
8. How else can you provide for your old age?
Any money paid into a pension plan is eligible
for tax relief. No other form of saving qualifies
for this benefit. A pension plan is the most tax efficient
way to save for your old age.
9. It’s never too late to pay in something. Even
if you’re approaching retirement, it’s still worth
paying money into a pension plan, as you’ll be
setting aside something for the future – and
claiming some tax relief from the government.
10.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.