Pension Myth-busting


How complex are pensions and how best to engage?

Consumer research has noted people don’t engage with pensions because they find them either boring or complicated or both! Some consumers think it’s best to wait until they’re older only to find out that this makes pension funding more expensive. So the question is – how complex are pensions and how best to engage? Here at KBC we like to keep things simple and that applies to pensions too – that’s why we’ve sat down to talk about and bust some common pension myths!

I don’t understand pensions - they’re complicated!

A pension is only as complicated as saving for your future – that’s it. Of course there’s a few rules as well but at a basic level, a pension is a long-term savings product that will provide for you when you stop working.

Okay that doesn’t sound too complex but starting and managing my pension sounds way too time-consuming!

Nope! Your pension can require as much effort as you’re willing to put in. The first step is the hardest – deciding to do something about it. At KBC our KBC Lifestyle PRSA – is designed to make pension planning really easy. You set your goals in our mobile App, answer a few questions and we do the rest. When it comes to investing your hard earned money we’ve designed a solution which is unique to you and your circumstances and adjusts as you move towards retirement – meaning your money does the hard work and you can relax.

But I don’t think I earn enough to save for a pension.

Any amount you can save today is “enough”. Something is better than nothing and the earlier you start, the less you’ll have to save!

With everything going on in the world right now, I need flexibility.

At KBC we want to offer our customers flexibility. In our mobile App you can set up your own pension fund in a few minutes. You’re then in full control – you can increase and decrease contributions, make once off contributions and you can even pause contributions for a while. So no matter what financial challenges you face you have the flexibility to adapt and save in a way that suits you!

That’s pretty handy but I’ve more important things I want to save for.

We understand people have many financial responsibilities but preparing for your future should always be a priority. Pension saving is for your future but it can be hard to prioritise as usually we like to plan for the now, next week/month or the summer. But the longer you wait to start your pension, the more expensive it’ll be! There’s also the added advantage of tax relief!

Why do I even  need a private pension? Can’t I just rely on the State pension?

The State pension is currently €248.30 a week (or only €12,911.60 a year*)! This could be a big drop in the level of income you’re used to and could force you to make some serious lifestyle changes. You could be restricted financially from doing things such as helping your kids and grandkids; taking up a new hobby or activity to fill up your newly free time, or taking that once-in-a-lifetime trip. You don’t want a limited source of income to stop you from living your best life post-retirement!

Well, couldn’t I just rely on my home instead of a private pension?

Investing in property instead of a pension can pay off but selling your home is a huge decision. If you plan on selling your home to fund your retirement, you’ll have to be prepared to downsize as you’ll still need somewhere to live.

But if the market crashes couldn’t I lose my pension anyway?

The value of your pension could go down (as well as up) but the risk of this will depend on how your pension contributions are invested. MyAutoinvest from KBC automatically moves your money into lower risk investments as you approach retirement.

OK, but do I have to take my pension at 65?

The age you claim your pension at can differ across types of pension plans but with a Personal Retirement Savings Account (PRSA), you can access your benefits anytime between age 60 and 75 – so you can retire when it suits you!

What would happen if I die before I get my pension? Would all my money be lost?

If you die before you retire, then your pension fund will usually be passed onto your estate. If you pass away after beginning to claim your benefits, what happens to your pension depends on what you decided to do with your fund when you retired.

Do I have to consolidate all of my private pensions?

Nope! Although it may be cheaper, more efficient and easier to keep track of, as well as less administration work for you, you don’t have to consolidate all your pensions if you don’t want to.
*correct as of 25/03/2019

By John Gethin Branch Manager, KBC Life and Pensions

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KBC Insurance NV trading as KBC Life and Pensions is authorised by the National Bank of Belgium in Belgium and is regulated by the Central Bank of Ireland for conduct of business rules. KBC Bank Ireland Plc are is tied to KBC Insurance NV trading as KBC Life and Pensions for the sale of Personal Retirement Savings Accounts (PRSAs). KBC Bank Ireland Plc is regulated by the Central Bank of Ireland.