Planning for retirement

Whether we like to think about it or not, retirement becomes a reality for the majority of us. The good news is that people retiring today tend to live longer and fuller lives than before. In order for us to have the type of lifestyle we would like in retirement we need to plan and save for it, and a pension is one way of doing that.
As we have an ageing population in Ireland, it is important that individuals make adequate provision for their retirement. To encourage the individual to contribute to a pension the Government offers tax relief on pension savings. 
Consumers also should be aware of the employees’ rights in relation to accessing a pension. By law employers are obliged to provide all employees with access to a pension. Where there is no company pension in place or where some employees can not access that company pension the employer must allow access to a Personal Retirement Savings Account (PRSA) provider. Read on for further information on the obligations involved.

Private Pensions
Pensions are by their very nature a long-term investment. Over the lifetime of a pension, which could be thirty to forty years, there will be times of high returns as well as low returns. This is to be expected with all investments and pensions are no different. For those who have started planning for retirement and are investing in a pension it is important to have an understanding as to the investment choices and risks being made on their behalf.

As mentioned above we’re living longer, the average person retiring tomorrow aged 65 years has a life expectancy of a further 20 – 23 years, this, coupled with increases in the standard of living means that the cost of funding your retirement is growing. It is therefore important that you engage with the pension process and remain engaged whilst you’re contributing to the pension during your working life, so that your expectations in retirement will be met. This is of even greater significance for those nearing retirement age, with five to ten years to go to retirement. The Pensions Board recommends that lower risk options be made available to scheme members as they approach retirement so that the growth experienced can be realised.

The Pensions Board offers a range of booklets, including PRSA’s, A Consumer’s Guide, written in collaboration with the Consumers’ Association of Ireland which help explain the pension process, read on for further information.

The Tax Relief

One of the more immediate benefits of contributing to a pension is the tax relief. This relief proves pensions to be one of the most tax efficient ways of saving for the future.

Tax relief is currently available on the pension contributions, the investment gains and most pension schemes currently allow for a tax free lump sum in retirement usually at 25%. It is generally recognised that the older you get your outgoings start to reduce. In order to incentivise you to allocate more of that income towards retirement the percentage limits of your salary which can be invested in a pension are increased; thereby increasing the tax relief available in accordance with your highest rate of tax – please see the table below.

Employer Obligations

Since 2003 employers are obliged, by law, to provide all employees with access to a pension. As mentioned above where there is no company pension in place or where some employees can not access that company pension the employer must allow access to a Personal Retirement Savings Account (PRSA) provider.

The obligations involved in providing access to a PRSA provider consist of three simple steps on the part of the employer -

1. To assign a PRSA provider*- this involves the employer contacting a provider and establishing an individual within the provider as their contact point.
2. To issue the PRSA provider and contact details to the employees and to allow them time during working hours to make contact with the provider and get the information they need.
3. If the employee decides to start contributing to a PRSA with the designated provider the employer must make the relevant deductions from payroll.

Please note the employer is NOT obliged to make any contributions to the employees’ pension but they must provide this access to all employees including part-time/ seasonal workers.

The Pensions Board will issue on-the-spot fines and prosecute any businesses found in breach of their obligations. Further information is available from the Pensions Board’s booklet PRSAs Employers’ Obligations from the website www.pensionsboard.ie and you can also check-out the Trustee and Employer Checklist.

*A list of all providers is available on the Pensions Board website – www.pensionsboard.ie

Further Information

The Pensions Board’s website www.pensionsboard.ie provides a range of information and resources including –

• Pension calculators – The Pension Calculator allows you to insert basic personal information such as your age, current salary, and the value of the fund (if any) invested to date and your target pension as a percentage of your pre-retirement salary. The calculator will then estimate the monthly contributions needed to provide for their pension at retirement. There are savings and advanced pension calculators available on the website also.
• Information Booklets – the Pensions Board also offers a range of booklet free to download from the website including
  • PRSAs, A Consumer Guide
  • What are my Pension Options?
  • PRSAs Employers’ Obligations
  • A Guide to Annuities
  • The Pension checklist – which provides a quick snapshot of the ten different questions you should ask yourself about planning for retirement and pensions.

If you have any further queries you can contact the Pensions Board at

Locall: 1890 65 65 65

The Pensions Board, Verschoyle House,Lower Mount Street,Dublin2

You should also talk to your bank, insurance company, building society, financial advisor about pensions today.

About the Pensions Board

The Pensions Board was established under the Pensions Act 1990, and aims to:

• promote the security and protection of members of occupational pension schemes, trust RACs and contributors to Personal Retirement Savings Accounts, in accordance with the Pensions Act, 1990, as amended
• promote the development of efficient national pension structures
• promote a level of participation in the national pension system which enables all citizens to acquire an adequate retirement income
• provide information and authoritative guidance to relevant parties in support of pension security, structures and participation.

About the National Pensions Awareness Campaign (NPAC)

The Pensions Board, on behalf of the Government, organizes the National Pensions Awareness Campaign which aims to

• encourage greater awareness and understanding of pensions among the general public and specific groups where pension coverage is low
• increase the numbers addressing the adequacy of their pension provision
• progress development of financial education planning and programmes inIreland.

NPAC runs a number of initiatives and programmes with representative and organizational groups, attending various seminars and events, as well as promotion and advertising campaigns.