You’ve made the decision to start a pension but now you’re not sure what steps to take next. The first one is to understand what your choices are in terms of a pension plan. This can be a little difficult as there are personal and occupational pensions as well as of course the State pension. Each type of pension also has different products and options. To help you get started we’re giving you a quick guide to the three main categories of pensions and the differences between them.
Pension Plans can be classed under three main headings:
1. State Pension (Contributory)
This is payable from the age of 66 if you have enough social insurance contributions. It is not means tested and you can have other income. At the end of March 2024, the amount payable is €248.60 per week or just €12,927.20 per year. There i salso a non-contributory State Pension, but it is means tested.
2. Occupational Pension
An Occupational Pension or often called a Company Pension is one that is arranged for you by your employer. The purpose of this is to provide retirement benefits for some or al lof its employees and can be seen as a highly rewarding company incentive. The plan is set up by an employer and usually both employer and employee will contribute. There is no legal obligation on an employer to provide a company pension plan and there can also be eligibility rules and set contributions required to join.
3. Personal Pension
Personal or private pensions refer to a pension that is organised individually by self-employed people or employed people who do not have the opportunity to avail of an occupational scheme. You choose the provider and make arrangements for your contributions to be paid. These include a Personal Pension as well as a PRSA (Personal Retirement Savings Account), which is a more flexible and transferable type of plan.
In addition to the above there are a range of different plans that allow you to do different things with your pension. For example to top up your pension e.g. Additional Voluntary Contribution (AVC), transfer your pension if you’re moving job e.g. Personal Retirement Bond (PRB) and those specifically designed for company directors e.g., Executive Pension. The new Pension Auto Enrolment scheme will also form part of the pension landscape going forward and will be available only to those who do not have either an Occupational Pension or Personal Pension in place.
So, what’s right for you? The important thing is that you have decided to start saving for your retirement. You now need to consider how much you would like as your retirement income and how much you need to put aside to achieve this goal. This is where the help of an experienced financial broker can be invaluable. At Searing Point Wealth Management, we’d be delighted to help you to take control of your retirement planning and work with you to build, manage and grow the optimum pension solution for you. Just contact us to arrange a suitable appointment.
