How do pension arrangements work?

There is one simple rule which will help you plan for your future – “the earlier you start to put money away for your future, the more you should have to avail of”. The extent to which you make disciplined choices now will help you have a retirement fund for later in life.

Advantages of saving for your retirement

A pension is sometimes described as a long term savings plan where regular or once-off amounts are invested (and these are called contributions). There are a number of benefits to saving regularly for your retirement:

You will have successfully put monies away for this event in your life and provided for it when you could afford it most
Income Tax Relief – all monies subject to an age related scale as below will receive income tax relief although it should be noted that any payment of a pension is currently subject to income tax when you retire.

Tax Free Investment Growth – there is no tax on any monies earned within your pension fund
Tax Free Cash at Retirement – one can drawdown up to €200,000 tax free from a pension scheme at retirement.

Note

Once monies are invested in a pension fund, one cannot withdraw them until retirement. Pension arrangements do not operate like on demand accounts and there are rules how one can drawdown on them and how as prescribed by the Revenue Commissioners.

Articles

The following article may be useful resource to assit you and your loved ones in developing your retirement plan and creating a secure and safe future for you and your family.

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Dictionary of Terms

Want to gain a better understanding of terms used by professionals in pensions and financial organisations?

Beat the Jargon!