Your pension fund is set up and you pay regular contributions…there’s nothing more to think about in the pension department, right?

Not exactly. Even though you’ve made the positive step of investing in your financial future by setting up a pension, it’s important to check in regularly to see how your fund is ticking along. Only 2 in 5 people know the value of their pension pots (Red C, 2019), but keeping track really is essential. This is how you can help make your dream retirement happen.

If you’re unsure what your overall pension target should be, a chat with your financial broker or advisor can help you decide.

To discover what you need to get on track for retirement, the first step is to check the current value of your pension fund.

Next step: Calculate your pension

How much is my pension fund worth?

When thinking about retirement, you want to have enough money in your pension fund to maintain a comfortable lifestyle for yourself and your loved ones.

The first step is establishing the current value of your pension. Many pension providers help you to monitor your pension online, and you can also check your annual pension statement to keep track of your savings.

Once you know your pension value, you can decide whether you’re on the right track or need to start saving a little more.

How to calculate pension value?

This calculator is a handy tool that helps you understand how much you should be saving to help maintain your living standards when you hit retirement age.

Simply enter your current salary and age, your monthly pension contributions, your employer’s contributions and what your current pension value is.

If the amount has fallen short of what you imagined, it’s time to make a few changes.

For example, Emma is 45 years old and on a salary of €50k, with a defined contribution company pension. Herself and her employer both pay 5% of her salary into her pension pot and she would like to retire at 66 with a retirement income of around two-thirds of her current salary (€33k). With a few clicks of the pension calculator, she can see she is falling short of her desired target unless she increases her contributions.

This assumes Emma contributes €2,500 every year into a company pension product from Irish Life Assurance taken out through her employer, invested into a medium risk fund, earning an estimated net annual return of 4.1%. The employer also contributes €2,500 per year. Charges are set at 1.05% with 100% allocation. This assumes premiums are indexed. If Emma retires at 66, she will have a pension of €5,727 (€4,189 when expressed in today’s terms) excluding the state pension. (April 2022, Irish Life Assurance)

How to increase contributions to your pension

So, how can you increase that pension pot and set yourself on track towards your dream retirement?

AVCs (Additional Voluntary Contributions)

Any extra money you put into your pension - on top of your usual contributions - is called an additional voluntary contribution or AVC. You must be part of a company pension to avail of AVCs, and to find out more about how they work, check out some of the most frequently asked AVCs questions.

Talk to your employer

The most common type of company pension is the defined contribution plan, where you pay a set amount of your wages into your pension each month and usually, your employer also makes a set monthly contribution.

When you joined the company, you would have been asked to decide what percentage of your salary will go into your pension each month and you may not have adjusted it since then. Take the time to talk to your employer and ask how much you can add to your pension each year. Increasing this amount can make a huge difference to your pension fund over time.

Income tax relief is one of the many benefits of paying into a pension and it’s wise to take advantage of these generous tax benefits.

The tax break depends on which tax band you are currently in, and you can take advantage of tax reliefs on your contributions up to €115,000. As you get older, tax breaks get better.

Someone aged 32 could squirrel away 20% of their annual salary into their pension and save tax, but if you are over 50, you can put away 30%.

Income tax relief is not guaranteed. To be eligible to claim income tax relief, your income must be taxable either Schedule E or Schedule D (case I or II).

Monitor your pension

As an Irish Life customer, you can keep track of your pension and how much you are saving by logging on to a dedicated app.

Seeing this figure increase will encourage you to continue saving towards your dream retirement. You can look forward to your golden years knowing your financial future is secure for you and your family.