It’s never too early to start saving for your retirement!
The good news is that Pensions still are an extremely tax-efficient way of saving. You get tax relief on your contributions at your marginal rate. The funds grow tax free until retirement, and you get a percentage of your funds tax-free at retirement or maturity.
Types of Pensions
You can save personally through a personal pension, a Personal Retirement Savings Account (PRSA) or Free- Standing Additional Voluntary Contributions (FSAVCs), or you can save through a company, with an executive pension, company scheme or AVC scheme. At Blue Sky Financial your financial consultant can advise on the best options for your particular circumstances.
The aim of a Personal Pension Plan is to build up a lump sum of money that can provide you with an income in retirement. The value of the benefits payable to you depends on the level of contributions you have paid and the return achieved from the funds in your pension. In simple terms, the more you are able to contribute the bigger the pot of money and the greater the benefits in retirement. However, there are limits on how much you can contribute in order for it to be as tax efficient as possible. In general, people seldom reach these limits. The first step is to contact your Blue Sky consultant to arrange a no-obligation financial review meeting.
Executive Pension Plans
If you are a director of a company you have the option of setting up an Executive Pension Plan which offers greater scope to contribute contributions than a Personal Pension Plan. In most circumstances, the company makes the contributions on the executive’s behalf. However both options are available, i.e. that the executive can contribute personally or the company. Typically, retirement options, can be accessed from the aged of 60, whereas a tax-free lump sum is available to a person in retirement.
There are two types of PRSAs available. A Standard PRSA is a contract that has a maximum charge of 5% on the contributions paid and a 1% per annum fee on the assets under management. A Non-Standard PRSA is a contract that does not have maximum limits on charges.
A buy-out bond is a means of transferring your pension entitlement into your own name when you are changing careers or have left the company because of, for example, redundancy. It offers you the option to transfer your pension from your current pension supplier scheme if that has been wound up, from a previous employer’s pension scheme or from a U.K. scheme. If you already have one, you have the option to transfer it to a different financial company which has a financial product that suits your particular needs. It offers you control of where your monies are invested, the choice of what company you wish to invest in and what type of funds – in simple terms – that you have the most control over and flexibility within. A huge advantage is that you can access it from the age of 50 – depending on your years of service with your previous company. Another great benefit is that part or all of it is tax free.
Where to invest is an important matter to consider?
It is important to consider your attitude to risk and return? You can choose from a wide range of funds that suits your financial goals.