Whether we like to think about it or not, retirement becomes a reality for the majority of us. The good news is that people retiring today tend to live longer and fuller lives than before. In order for us to have the type of lifestyle we would like in retirement we need to plan and save for it, and a pension is one way of doing that.
As we are an ageing population in Ireland, it is important that individuals make adequate provision for their retirement. To encourage private pension coverage the Government offers tax relief on pension savings. In 2003 legislation was introduced which made it obligatory for employers to provide access, as a minimum, to a pension for all employees.
For anyone running and managing their own business in the restaurant or hospitality sector it is important that they understand their obligations towards employees and the pension options for their own future.
Since 2003 employers are obliged, by law, to provide all employees with access to a pension. Where there is no company pension in place or where some employees can not access that company pension the employer must allow access to a Personal Retirement Savings Account (PRSA) provider.
The obligations involved in providing access to a PRSA provider consist of three simple steps on the part of the employer -
Please note the employer is NOT obliged to make any contributions to the employees’ pension but they must provide this access to all employees including part-time/ seasonal workers.
The Pensions Board will issue on-the-spot fines and prosecute any businesses found in breach of their obligations. Further information is available from the Pensions Board’s booklet PRSAs Employers’ Obligations from the website www.pensionsboard.ie and you can also check-out the Trustee and Employer Checklist.
*A list of all providers is available on the Pensions Board website – www.pensionsboard.ie
Pensions are by their very nature a long-term investment. Over the lifetime of a pension, which could be thirty to forty years, there will be times of high returns as well as low returns. This is to be expected with all investments and pensions are no different.
For those who have started planning for retirement and are investing in a pension it is important to have an understanding as to the investment choices and risks being made on their behalf. As mentioned above we’re living longer, the average person retiring tomorrow aged 65 years has a life expectancy of a further 20 – 23 years, this, coupled with increases in the standard of living means that the cost of funding your retirement is growing. It is therefore important that you continue to engage with your pension whilst you’re contributing to it during your working life, to ensure that you will receive an adequate pension in retirement. This is of even greater significance for those nearing retirement age, with five to ten years to go to retirement. The Pensions Board recommends that lower risk options be made available to scheme members as they approach retirement so that the growth experienced can be realised.
One of the more immediate benefits of contributing to a pension is the tax relief. This relief proves pensions to be one of the most tax efficient ways of saving for the future.
|Highest age at any time during the tax year||Limit|
|60 and over||40%|
Note: Contributions will also be relieved from PRSI and the Health Levy, if you pay these charges.
Tax relief is available on the pension contributions, the investment gains and most pension schemes currently allow for a tax free lump sum in retirement usually at 25%. It is generally recognised that the older you get your outgoings start to reduce. In order to incentivise you to allocate more of that income towards retirement the percentage limits of your salary which can be invested in a pension are increased, thereby increasing the tax relief available in accordance with your highest rate of tax – please see the table below.
The Pensions Board’s website www.pensionsboard.ie provides a range of information and resources including –
If you have any further queries you can contact the Pensions Board at
Locall: 1890 65 65 65
The Pensions Board, Verschoyle House, Lower Mount Street, Dublin 2
You should also talk to your bank, insurance company, building society, financial advisor about pensions today.
The Pensions Board was established under the Pensions Act 1990, and aims to:
The Pensions Board, on behalf of the Government, organizes the National Pensions Awareness Campaign which aims to
NPAC runs a number of initiatives and programmes with representative and organizational groups, attending various seminars and events, as well as promotion and advertising campaigns.