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Irish Pension: Do you have financial retirement concerns?

British Airways Photograph: Simon Dawson/Reuters

Ireland is facing a €30bn deficit as the economic cost of coronavirus but who will actually pay for it?

Government pension funds will suffer. Whether it will be an increase in retirement age or increase in taxes, it will impact on savings and retirement funds.

Studies by the Central Statistics Office have shown that only 6 out of 10 Irish workers have some sort of a private pension plan. The report has demonstrated a common issue “failure to get round to it”. The Irish Association of Pension Funds said that just 50.4% of workers are contributing to their occupational or private pension plan and 51% of self-employed have made some pension provision.

Over 60% of people who have not started a personal pension scheme intend to rely on the state pension when they retire…
State pension pays a maximum rate of 248.30 EUR a week. If you do not have a private pension set up, they are looking at less than 1,000 EUR a month. Is that enough to live in retirement?

Company pension schemes – what are the returns and costs?

The occupational (company) pension funds are generally invested with fund management financial companies, who have full discretion over your funds. These are not as secure as you may think. Just because you and your employer contribute into a plan, does not mean they are risk-free. The fund managers pool the funds together and invest them into stocks, bonds, ETFs and other financial products to earn a return.

Some fund managers take more risk than others, with annual gross returns varying from negative to an average of 5.4%. Then, you must deduct the fund management and administration costs, which can amount to 30% depending on the terms and conditions.

Most pension funds are invested into bonds due to the low-risk but also they earn a very low (no more than 1%-1.5% p.a.) or negative return. This doesn’t make much sense as inflation and admin fees eats into the fund. In 2021 the inflation rate is estimated to be 1.6%, which means that each €1 you have will lose 1.6%.

How much will you get in your retirement and will this be enough?

If at 45, you are earning €100,000 per year and contribute €750 (and your employer contributes €750 per month) into your company pension plan (a total of €1500); at a 5% annual compounded return, at the age of 65, your total retirement fund will be €600,000. For simplicity, with 5% of total admin fees applied, this will bring it down to €570,000 and 20% tax on the first 200,000 and 40% on the remaining, which leaves you with €382,000 in retirement.

If you wish to maintain the same standard of living at €100,000 per year, your retirement savings will last you for 4 years. If you reduce to 80% of your annual salary, the savings will last you 5 years.

Solution: take control of your savings and retirement financial planning, through your private pension plan as well.

Private Pension and Savings Plan – you will regret not having one

Don’t make a mistake of leaving it too late, not contributing enough and most importantly diversifying. Relying only on company pension schemes can lead to disasters.

A private pension plan will allow you to secure your financial future and make sure you have enough funds to live on after you retire.

Those who are in the lucky position of being able to save money but find it hard to get a decent return with low interest rates and volatile markets, investing is the best thing you can do with your cash, especially with high inflation rates coming in the next few years which will decrease your cash value.

There are several products on the market that allow you to easily grow your savings. Such products include the 12-month Fixed Income note paying 10% per year (no management or admin fees), the 15 years S&P 500 Index plan which guarantees your capital to not reduce in value, the StrategyShares Nasdaq Handle Index ETF which commits to a 7% annual dividend and other products.

If you have been putting off planning for retirement, now is the time to give it some attention.

For more information about the available savings and retirement products please click here or email us at

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