Your most suitable pension plan will depend on your present and future employment details. 

For tailored pension advice on what type of pension suits your needs, we suggest speaking with a Financial Advisor.

You should consider increasing the amount of contributions each year to help offset inflation where necessary. As a general rule of thumb you should aim for an income in retirement of between 50% and 66% of your final salary, your contributions should be sufficient to enable you to retire on a total income, including state pension.

Most people underestimate how much they'll need to save to provide an adequate income when they retire. The earlier you start to save, the greater potential for reaching your income in retirement goals. It's never too late to start your pension, but it's so much easier when you start early.

If you would like to know more about what income to aim for in retirement, please click here

You should get the State Pension (Contributory) as well as your own private pension when you retire provided you have made the required number of PRSI contributions throughout your working life. If you do not have the required number of PRSI contributions you may be entitled to the State Pension (Non-Contributory), which is a means-tested payment. The earliest age at which you may qualify for a State Pension is currently 66. 

By contributing to a pension plan, you can reduce the tax you pay and instead invest it for your retirement. If you have a non-employer PRSA, you pay the full contribution and then claim back the tax relief in your annual return. If you have an Executive Pension Plan or an employer-sponsored PRSA, you pay the net cost from your salary, and the government's tax relief automatically makes up the difference.

If you start a PRSA, you will receive a PRSA certificate shortly after your plan starts, which may be provided to your tax inspector if required. If you are self-employed, send this certificate in with your annual returns, and your tax bill will be reduced for you For Executive Pension Plans or an employer-sponsored PRSA, tax relief is given to you through the PAYE system. You should seek independent tax advice where necessary.

Tax relief is granted on pension contributions at the top rate of income tax that applies to you. The following table illustrates the effects of tax relief on monthly contributions:

Source - revenue.ie (August 2023)

The tax relief limits for Personal Executive Pension or PRSA contributions are detailed in the following table:

Source - revenue.ie (August 2023)

Net relevant earnings for tax relief purposes are currently subject to an earnings limit of €115,000 per annum from all employments. Any investment growth will accumulate tax free until you decide to take your retirement benefits. For personal pensions contributions, there is no maximum contribution that can be paid, but you may only claim tax relief on them each year within the above limits. (Source - revenue.ie August 2023)

In the 1999, 2000 and 2011 Finance Acts the Minister for Finance made some significant changes to pension legislation which allowed self-employed people and members of company (occupational) pension schemes to retain control of their funds when they retire.

Previously, after taking a lump sum, the balance of the proceeds of personal and defined contribution pension plans had to generally be used to buy a pension for life in the form of an annuity from a life assurance company.

Now people retiring can opt to take the remainder as as a taxable lump sum (less a tax charge) in certain circumstances, or to leave their fund invested in an Approved Retirement Fund from which they can withdraw income as they require. Approved Retirement Funds can be passed to your estate on death. The flexibility which these options provide is another advantage for taking out a pension plan.

At retirement, part of your fund is payable free of tax subject to limits and the remainder is taxed as income.

The amount of income you will need in your retirement will depend on your personal circumstances when you retire. General rule of thumb is two thirds of final income (66%) including state pension.

It is often suggested that your need for regular income will reduce on retirement. This argument is based on the assumption that your mortgage should be paid off, your children should have left home and you will not face commuting or similar travelling expenses.

On the other hand, there will still be bills to pay. You should not be forced into a lower standard of life just because you are no longer working. Retirement means you have all the time in the world, with proper pension provision you can make the most of this time.

When you reach retirement age, you are entitled to take 25% of your pension fund as a lump sum. Regarding the balance of your pension fund, the following options are open to you:

• Buy an annuity with a life company. The annuity will provide you with an income for life
• The balance may be taken as a taxable lump sum subject to income tax and government levies.
• Move the balance of your fund to an Approved Retirement Fund.
• For PRSAs only, you can leave your remaining fund invested in the PRSA until you reach age 75. Once the retirement lump sum is taken, your PRSA will then be known as a “Vested PRSA”.

If you are a member of an occupational pension scheme you may alternatively take a retirement lump sum that is dependent on your salary and your years of service (subject to pension scheme and Revenue rules). If this option is taken, the remainder of your fund must generally be used to purchase an annuity.

Note: tax free lump sums are subject to a lifetime of limit of €200,000 as per the Finance Act 2011. This means that lump sums in excess of €200,000 are subject to tax. (Source - revenue.ie August 2023)

• You receive tax relief on your total contributions and your fund accumulates free of all taxes.
• At Acorn Life we offer many different funds to meet your investment needs and appetite for risk. Our funds are managed on our behalf by global, established and professional fund managers. The factsheets for each of our investment funds provide details such as suitability, fund objective, asset allocations and risk levels. To view the factsheets please click here.
• Your benefits and contributions are protected against inflation where indexing is applied.
• You can make additional contributions to your fund. Additional contributions can be made either as regular or one-off additions at any time.
• You can transfer between funds.
• You can switch funds under your pension when your circumstances change. You can start your retirement by taking up to 25% of your total fund as a lump sum.
• You can change jobs without affecting your plan Your Pension Plan is controlled by you.
• You have flexibility in deciding when you want to retire. (subject to Revenue Rules)
• Your pension is your future. Your Pension Plan from Acorn Life ensures that when the time comes you can enjoy the benefits of financial independence.