FAQ Friday: Puzzled by pensions? Let’s fill in the pieces!
September 27, 2024
Our recent pensions research reveals one in five adults have no financial plans in place for their retirement. The sooner you start saving even with small amounts, the more these can grow to help your future savings.
Pensions are complex and hard for people to get their heads around. We’ve put together a sample of questions consumers ask us, about starting a pension and reviewing current plans.
Why should I bother with a pension?
A pension is a long-term savings plan to help you build up a nest egg for your retirement. It is important you plan ahead for your financial needs as you will still have costs to meet.
Our Pensions Hub explains the different pensions available.
Did you know?
Pension contributions qualify for tax relief, meaning the Government puts money back in your pocket after you contribute to a pension. The income tax benefits encourage you to invest for retirement. The amount of tax relief you get depends on how much tax you pay.
I’m in my forties, changed jobs a few times and never got going on a pension. I feel like I have missed the boat and am too late now to start?
You can start right away! Even though you’re in your forties, you are still 25 – 30 years away from retiring. This gives you a lot of time for investment growth!
As someone who is further in their career, you may have moved up the career ladder and can pay more in than when you were younger. Consider putting any pay increases you get towards your pension to start.
Learn about starting your pension.
I don’t want to pay heaps of money into a pension plan, how much is enough?
There is nothing wrong with starting small. By paying a small amount regularly, your pension pot builds up over time. Play the long game when it comes to pensions. Investing early and leaving it all untouched pays off even if you are not paying more along the way.
You will earn compound interest on the money you pay into your pension pot and on the money your pension pot earns. A win win scenario!
I finished my postgrad and will soon start a proper job. Will I go on a pension scheme automatically?
The first thing to do when you start a job, is to check does your employer have an occupational pension scheme. If your employer does not offer a pension scheme, fear not because Auto-enrolment is due to be introduced in 2025.
f you are between the ages of 23 and 60 and earn €20,000 or more, you will automatically join a pension scheme when you start your new job. People who do not have a pension in their current job will also join one automatically next year.
Learn more about auto enrolment pensions.
I have not reviewed my pension for yonks! What should I consider?
You may have been paying the same amount into your scheme if you have not reviewed it for a couple of years. This could be more than you need to pay. Ask your pension company about it. It might be time to consider changing how much you contribute and/or moving your pension to another investment fund.
Top Tip
Pensions can be daunting, and a professional expert can help. Talk to a financial adviser, pension provider or your employer about your policy. We have advice on meeting your adviser.
