20 October 2023
How to DIY a Pension Plan
Not every employee has the benefit of an employer-sponsored pension plan.
The self-employed and those whose employers do not offer occupational pensions must take responsibility for their own retirement savings.
What types of Personal Plans are available?
Personal Retirement Savings Accounts (PRSAs) are a popular option for those who do not have a work-related pension. PRSAs are flexible, allowing you to increase or decrease your monthly contributions without penalty. They are also portable, meaning you can carry them from one employer to another and/or transfer them to another provider without penalty.
Personal Pension Plans offer a wider choice of investment funds than PRSAs. However, charges are not fixed at a maximum, so they could be lower or higher than those associated with PRSAs.
It is important to get advice from a qualified financial advisor to help you choose the right type of pension for your needs. They will also be able to explain the management charges, contribution charges, allocation rates, exit charges, and fund switching charges associated with different types of pensions.
Synergy Credit Union has partnered with Irish Life Financial Services to provide you with access to expert financial planning and advice.
How do I make an appointment with one of Synergy Credit Union’s Financial partners?
Learn more about our financial planning partnership here. Synergy Credit Union Financial Planning
Book your no-obligation appointment today for a time that suits you. Financial Advisor Appointment
Why should you start a Pension Plan?
The three main reasons to start a pension are the 'Three Ts':
- Tax relief: You can enjoy tax relief on the premiums you pay, up to 40%.
- Tax-free investment growth: Your premiums will grow tax-free, which is a better option than a standard deposit account.
- Tax-free lump sum at retirement: A tax-free lump sum is an excellent way to kickstart the next chapter of your life.
How much should you contribute each month?
Our financial partners at Irish Life can help you answer this question. You can also use the calculator on the Pensions Authority website to get an estimate.
The calculator will estimate how much you need to contribute each month to your pension in order to reach your desired retirement income, based on certain assumptions.
This calculator clearly shows that the younger you are, the less you need to contribute each month. Start your pension early - the longer you leave it, the more you will need to contribute!
Don't be disheartened if you can't meet the recommended contribution figure. Even a small amount is better than nothing. The main thing is to start saving for your retirement now.
Review your pension regularly.
Can you afford to increase your contributions? What returns are you getting? Is your fund growing? Are you invested in the right fund for your stage in life? Can you afford to take on more risk, or do you want to avoid risk as you approach retirement age?
Our financial partners at Irish Life can help you review your pension. There is no obligation to switch your pension or buy another product.
Book a no-obligation appointment to speak with a financial advisor today. You can book your appoint here: Financial Advisor Appointment