Pensions in Ireland: Investing in Your Future.

Part One of a Three Part Guide to Pension in Ireland in 2022

In this short guide to Pensions in Ireland we focus today on Personal Pensions or Personal Retirement Savings Accounts (PRSAs). These pensions are suitable for anyone in non-pensionable employment or for the self-employed.

Below are some Personal Pension Basics:

  1. A Personal Pension or a PRSA is a savings vehicle.
  2. The savings you accumulate help you to have a good lifestyle when you stop working (or wind down a bit!)
  3. These savings can usually be accessed after 60.
  4. You get tax relief on your savings (pension contributions) as you pay them; within certain limits.
  5. Your savings grow free of tax before retirement (NO DIRT TAX IS DEDUCTED)
  6. You get a sizeable portion of your savings in a TAX FREE LUMP SUM at the end.
  7. You can choose where your savings are invested and how much risk to take as you build up your fund.

Pensions in Ireland/Investment Choice: 

Your hard earned money needs to grow over the years and this is achieved by investing in a Pension Fund. These Funds are offered by the various Pension Providers and are managed by professionals whose job it is to get you a decent return over time.  The fund managers try to get this growth by invested your money in a range of assets described below:

  1. Equities: These are shares traded on stock markets worldwide.
  2. Property: Many pension funds will have an element of property, usually commercial property.
  3. Bonds: Both Government and Corporate Bonds are used. A Bond is similar to a loan offered to a Government or a Corporation with a guaranteed return.
  4. Alternatives: Funds may also invest in Commodities (Coal, Gold, Oil etc.) and many now focus on renewable energy and green investments.
  5. Cash: Some of your fund may be held in cash with returns based on bank interest rates.

Pensions in Ireland/Risk:

  • The assets above have different levels of risk.
  • Shares (Equities) and Property can make great returns but are more risky, especially in the short term
  • Cash is low risk but offers low returns, particularly at the moment.
  • The key is to blend these assets in a manner that suits you.
  • Pension Funds invest in these assets in order to achieve growth and vary the blend (fund mix), which effects the level of risk.
  • You should seek financial advice in order to choose a blend (Fund) that works for you.

Pensions in Ireland/Summary

  • A Personal Pension (PRSA) is a tax effective savings vehicle.
  • A Personal Pension will help you to have a better lifestyle later on.
  • Your funds need to be invested to grow.
  • You decide on how much risk to take (In consultation) with your Financial Advisor.
  • Starting early is a BIG ADVANTAGE!

For information on our Pension Review service click here Simple Facts Pensions

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McCann Financial Consultants Ltd t/a O’Sullivan Financial Solutions is regulated by the Central Bank of Ireland

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