Information on Your Pension
Advances in modern medicine and improved standards of living mean that generally people are living longer and can look forward to 20 or 30 years in retirement. This is a long time to enjoy the good aspects of life and most people would plan to relax, to enjoy themselves and spend more time with family and friends. Everyone will certainly want to maintain the standard of lifestyle that they enjoyed while they were working.
No-one wants to feel restricted or impoverished in retirement but this will be the reality for many people if they do not take the time and trouble to plan properly for their retirement. This means thinking about a pension and saving the right amount into it from an early age.
What is a pension plan
A pension plan is a long-term savings plan, where regular amounts and / or once-off lump sums are built up into a fund for retirement. The amounts that are saved to their pension are called 'contributions'. A pension plan is one of the most important investments a person is likely to make in their lifetime.
The importance of saving the right amount for retirement
If you are a member of a pension plan you are fortunate as not every Irish employer provides a pension plan for their employees. It is important when you join the plan to take the time to understand your pension plan and how much you should save into it so that you can afford the lifestyle that you are used to, when you retire. Many people fool themselves into thinking that the small percentage of salary they save into their pension plan will be enough to fund a 25 or 30 year retirement.
Ask yourself what percentage of your current salary would you need to live comfortably in retirement? Some expenses may decrease in retirement, but others, like electricity bills, heating bills and medical expenses may actually increase as you get older. The earlier a pension plan is started, the more time the fund has to accumulate and the better off you will be in retirement.
Preparing for retirement means starting your saving now!
Retirement is something that will happen to everyone and needs to be prepared for. By starting preparation for retirement as early as possible, you'll find it easier to build up a fund that can provide you with the type of lifestyle you want in retirement.
The most painless way to start your pension plan if you are in your twenties or thirties is to start small and build it up gradually. So each year when you get a salary increase - commit to putting part of the increase into your pension, before you get used to spending it.
If you are in your forties or fifties when you start saving into your pension plan, you have more ground to make up so you should commit to saving a higher amount into your pension plan and making additional voluntary contributions (AVCs). You should read the "How Much To Save?" section on this site.
Talk to Irish Life Corporate Business or the Financial Advisor that looks after your company pension plan to discuss what is right for you. Your HR area will be able to tell you who you should contact.
