Your pension, your way
Quite simply, a pension is a long term savings plan which is designed to give you an income when you retire. You pay money into a pension scheme and that money is then invested on your behalf until you retire.
Your pension options will vary depending on your employment status and your retirement expectations. The good news is that there are now more pension options than ever so there's bound to be a pension just for you.
PRSA - a Personal Retirement Savings Account is a good idea if you're self-employed, don't have access to a pension at work, or work casually or part-time.
Personal Pension - if you're self-employed or employed but not part of an employer's pension scheme, then a personal pension plan lets you plan for your retirement and enjoy the tax benefits.
Company Pension - every employer has some form of pension obligation to its employees. There are numerous pension options that allow companies to meet their obligations and provide a mutually rewarding benefit for their staff.
Executive Pension - as a director or business owner you can provide for your retirement in a way that is separate from the fortunes of your business and takes full advantage of the generous tax benefits.
Self Administered Pension - these are well worth considering if you're an owner-director or senior employee of a business and you can make substantial pension contributions. You get to choose from the full range of investment options on the market including equities, bonds, cash, currency. You can even invest directly (and very tax-efficiently) in property.
Tax benefits make a big difference
Of course there are other ways of planning for your retirement years, such as savings plans, property, deposit accounts and more. But the big advantage of using a pension to plan for your retirement is the tax benefits that pensions enjoy:
- You get tax relief on your pension contributions
- Your pension fund grows tax-free
- You can take a tax-free lump sum when you retire
There's never a bad time to start a pension
Just like any savings plan, the earlier you begin paying into your pension the more time it has to grow. This also means that you can start your pension with a relatively small amount of money and build this up as you go through life and your income grows. The later you leave it, the more money you'll need to put in to ensure a comfortable retirement.
Everybody's circumstances and expectations of a pension will be different. Some will have access to their employer's pension scheme, while others may prefer to have more of a say in where and how their money is invested.
Whatever pension you're thinking of, it's important that you know some of the details of each product under consideration, especially the track record of the underlying funds and the scale of charges that apply. Each of these factors will play a big part in determining the ultimate performance and value of your pension.
What happens to your pension when you retire
As your retirement age draws near, you'll have some important decisions to make about what to do with your pension when you retire. Depending on the type of pension you have, you will be able to withdraw up to 25% of your fund as a tax-free lump sum. You can also purchase an annuity with the balance or even all of your fund - an annuity pays you an income for the rest of your life.
If you already have a guaranteed income for life of at least 12,500 per annum, then you can choose to put your money into an Approved Retirement Fund (ARF). This gives you considerable control over how your money is invested, a regular income and access to your capital.
We can help you choose the right pension
At CFS we can work with you to identify your pension needs, review your options and then help you choose a pension that fits your circumstances and your retirement expectations. Then, as you approach retirement we can show you how to maximise the potential of your pension so that you enjoy your retirement to the full.
If you're an employer we can help you to plan, establish and administer a pension plan for you and your employees. We have many years' experience of reviewing company needs, advising on employer obligations and helping build and implement successful and rewarding company pension schemes.