If you are a member of a defined contribution scheme or you are making AVCs, you may be provided with a range of investment options to choose from for your pension contributions. You should carefully review the information provided on the options available before making any decisions and take professional advice if possible to ensure the investment strategy chosen is the most appropriate to your own personal needs and appetite for investment risk. It is important that you periodically review any investment decisions taken and most especially in the years running up to retirement as you may wish to protect any investment gains made.
BENEFITS AT RETIREMENT
You will have a separate pension “account” within your Employer’s Scheme into which the contributions are paid by you and on your behalf. The value of the “account” will depend on the amount of contributions invested and the investment return earned on them.
At retirement the value of this “account” will be available to provide benefits for you and your dependants within limits laid down by the Revenue Commissioners.
You will have the option to take a substantial part of your “account” as a tax free lump sum, purchase an annuity to provide a pension income or take ownership of your fund in retirement by investing in a post-retirement arrangement known as an Approved Retirement Fund (ARF).
You do not have to make these decisions during your working life. The decision as to the mix of benefits can be made at retirement to suit your circumstances at that time.
Any entitlement you may have under the State Pension (Contributory) is payable to you in addition to your retirement benefits under your employer’s pension scheme.
PERSONAL RETIREMENT SAVINGS ACCOUNT (PRSA)
A personal retirement savings account (PRSA) is a type of personal pension policy that is more flexible than the traditional personal pension plan. Anyone up to the age of 75 can take out a PRSA and you don’t have to be earning an income to do so.
If you are employed, by law your employer must offer you access to a standard PRSA if:
- there is no employer pension scheme in place through your job
- you are not eligible to join your employer’s pension scheme within the first six months of your service
- you are eligible to join your employer’s pension scheme but only for death-in-service benefits.
Some Employers offer group PRSA arrangements for staff that work similarly to employer sponsored occupation pension schemes but the PRSA is personally owned by the member and these schemes do not require a Trustee. If you contribute to a PRSA set up by your employer, you get tax relief automatically and don’t have to claim it yourself. Your employer may also contribute to your PRSA but does not have to. You can also set up a PRSA if you wish to make AVCs but are not able to (and don’t wish to) do so through your employer’s pension.
GROUP RISK BENEFITS
Your employer may put in place arrangements to provide insurance benefits for you. A typical employee benefits plan would include risk benefits such as Death in Service and Income Protection. The reality is that some people will die prematurely, or may have prolonged periods of illness during their working life, making this cover an essential part of any employee benefit package.
Some employers may provide dependant’s pension death in service benefit, to provide for someone who is financially dependent on the scheme member for the ordinary necessities of life (eg living expenses). Another risk benefit that may be available is Specified Illness cover to pay a lump sum in the event of a specific illness being diagnosed.
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