Irish Pension Information

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A Defined Contribution Pension is a pension scheme that sets out the amount you need to put into your pension

A Defined Contribution scheme or DC for short will specify the amount that you put into your pension. So, for example, you could put in 5% of your salary and your employer might do the same.

Each member of a DC scheme has their own pot into which all of their contributions go. These are then invested and whatever value they have reached when you retire is the amount you receive.

Charges on Defined Contribution Pension

As interest rates are quite low at the moment it is really important to keep an eye on your fund charges. Many people don’t notice this but if your fund is growing at 1% per year and your pension administrator is charging you 1.5% per year then you could actually be losing money!!!

Now in most instances, your employer will be making a contribution so it still makes sense to use your occupational scheme to save. BUT what if you want to top up your fund?

Wooden blocks with the word cost and arrows upwards. This is to signify the costs associated with occupational pensions.

If you are thinking about topping up your fund it may be better to set up a personal pension. This gives you the flexibility to choose your own investment.

So you can compare what is available on the market and choose what is the best for you. So for example Aviva might be offering a better rate than Zurich and a lower charge. If this is the case it makes perfect sense to choose Aviva.

Why might you think of topping up your fund?

There are normally two reasons you would top up your fund. The first and most obvious is to give less of your hard-earned cash to the taxman. The second is if your fund is too small and you are worried you won’t have enough money during retirement.

So what might you do? You might go to a financial advisor and say “Hey! I’m paying a shed load of tax and I don’t want to. What can I do?” Your advisor will then calculate the best contribution for you taking into account tax paid and of course, your weekly take-home pay now.

You also might want to take a look at what is in your pension currently and see how much might be there when you retire. Once you have this information you can decide if you need to add more or less. It might also help you realise that you can retire earlier than you first thought.

If you want to see where you stand now with your pension. You can organise a free pension review. Please request a call back here.

A member of our team will contact you to discuss your goals. We will then connect you to the financial advisor best suited to your needs. There is no charge for this service. All of our advisors are regulated by the Central Bank of Ireland.

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