A pension is the best Wealth Management Tool for anyone in Ireland trying to build up their long-term wealth. There are many reasons why no other approach can match a pension when it comes to providing an income for when you’ve retired.
Firstly, tax relief at your top rate of income tax means that for every €100 of net pay you put in you will receive €167. This will be more if you are a business owner and contribute via an executive pension or PRSA, this could be as much as €200.
Secondly, you’ll receive tax-free investment growth because your money is put to work over many years. Exit tax is at 41%.
Thirdly, when you retire, you can take a tax-free lump sum at retirement typically 25pc of the value of your funds. Up to €200,000 tax free payment.
Fourthly, you and your spouse will receive a Tax free allowance of €36,000 at 65.
However, charges can make a significant impact on the value of your pension. There is money to be won and lost by setting it up right, so use a provider that offers transparency on charges and good value in return for their work. Anyone with a Standard PRSA could be paying up to 6% in fees, that is far too high and it is time to move to a provider that has fees that are a lot less.
The hardest part of sorting out your pension is making a start on it. If your employer doesn’t offer a company pension, it’s down to you to take charge. Once you do, you’ll begin to see your money build up, you’ll enjoy compound investment growth over time, and your pension fund can become a source of peace of mind and financial security.
No one solves their retirement plan overnight. Starting sooner makes things a lot easier, because investment growth does more of the work for you.
