Pension Review

With increased longevity, pensions are an essential part of financial planning. It is important that everyone is aware of their pension outlook early enough to be able to make plans and relevant adjustments.

Sources of Pension Income

There are four potential sources of pension income for Irish residents.

• Irish State Pension
• Occupational pensions (Defined Benefit/ Defined Contribution)
• Private pensions/PRSAs
• Foreign Pensions
• Investment income

If you are in employment in Ireland, you will be building an Irish Contributory State Pension with every year you work. This pension is paid when you reach the state pension retirement age currently 66 years, and have sufficient social insurance contributions. If you have full contributions, the maximum pension for 2019 is €248.30.

The Irish State Pension provides only a basic income and the predictions are that the state pension age will only increase. Therefore, other sources of pension income are becoming ever more important. Certain occupations, such as teachers, nurses, medical doctors, etc., have their own occupational pension schemes. These pension schemes can provide for a much better pension income for their members.

However, many employees are not fully aware how these pension schemes work and what will be the potential benefits at retirement. This is a problem in pension planning as members end up contributing to pension products which may not be tax efficient and end up costing more than benefiting.

Pension Review

The complexity of pensions, requires regular pension reviews to ensure maximum benefits. Why do you need a pension review?

• To make sure your pension contributions are tax efficient
• To calculate the projected benefits so that you can plan accordingly
• To ensure that your pension is invested in the best funds for your situation

A standard process in IPS Financial Advice is that we review and evaluate your full pension portfolio. This involves gathering of information about the value of pension you are currently contributing to and pensions from previous employments.

Pension reviews are generally provided free of charge, as financial advisors are paid commission by pension providers. However, financial advisors are regulated by a code of conduct set by the Central Bank of Ireland, so you can be ensured you are getting unbiased advice.

Possible Outcomes from a Pension Review

A pension review may discover pensions you had forgotten about. Any pensions from previous employments need to be examined for their profitability. It might be advisable in some instances to get these transferred or consolidated with other pensions for maximum benefits.

Many Irish residents have previously worked in the UK and have accumulated UK State and occupational pension benefits. IPS Financial Advice specializes in a track and trace service of UK pension benefits.

A regular pension review can be essential for people with large pension pots which may exceed the Standard Fund Threshold of €2mln. Good financial advice can avoid paying unnecessary large amounts of tax when drawing down benefits. For some people, a pension transfer may be a viable option too.

Following a comprehensive financial review, we give recommendations on any possible adjustments which may increase your prospects at retirement.

Generally speaking, anyone can benefit from a pension review. We advise public sector employees, private sector employees and self-employed individuals.