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The importance of having a pension plan
You’ll need an income: Unless you plan on working for the rest of your life, your pension may one day be your predominant, if not your only source of income. So it’s really important that you plan ahead now so you have income when you’re no longer working.
Longevity: People are now living longer than ever as life expectancies continue to rise. A 65 year old woman in 2016 could expect to live for another 21 years (CSO 2016)! So post-retirement you could have to survive on your pension for 20 years or more – meaning it’s important to make sure you’ve adequate pension savings.
The State pension might not be enough: At €12,911.60 (as at March 2019), the State pension is supposed to provide a basic income which could be a big drop in income from what you’re used to and may require many lifestyle changes. The European Anti-Poverty Network suggests that having a yearly income below €12,521, places an individual at risk of poverty (EAPN 2017). So, relying solely on the State pension could leave you financially vulnerable.
Financial security: No one knows what the future holds. While the State pension may cover your bills and other day-to-day expenditure, the peace of mind that comes with having additional income for any unexpected bills or capital expenditure is invaluable.
Fund the lifestyle you want: Do you have a vision for how you’ll spend your retirement? What’s on your retirement bucket list? Maybe you want to take up a new hobby, or travel more? Setting up a pension now will allow you to make provisions to live the life you want when you retire and can be the difference between just surviving and enjoying your retirement.
Avail of income tax relief: Contributions you make to a pension plan may be eligible for tax relief – making saving for your pension very tax efficient and more worthwhile than you thought! The applicable rates of tax relief depend on your age and annual income. Investment gains made on your pension contributions are also tax-free.
A savings account isn’t enough: As well as not being eligible for tax relief and any gains are taxable a savings account while valuable is often too accessible and it is tempting to dip into it on a rainy day. A dedicated pension plan would remove this temptation and protect your savings.
Starting early will save you money: The sooner you start putting money away, the better. Giving your pension more time to be invested also allows for greater potential gains.
By John Gethin, Branch Manager, KBC Life and Pensions
Warning: The value of your investments may go down as well as up
Warning: If you invest in these funds you may lose some or all of the money you invest
Warning: Past performance is not a reliable guide to future performance
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.