PENSION VERSUS AN ORDINARY SAVINGS PLAN
A savings plan is another way to put money aside and of course you can get at it any time you need it. But for long term needs like retirement, easy access is a drawback, not an advantage. It’s all too tempting to dip in. More significantly, the tax benefits that come with a pension make it a more efficient way of saving.
The simple answer is that the income tax relief on a pension gives it a head-start. For example, supposing you saved €300 into a savings plan. If you put that into a pension instead it would be equivalent to investing €375 per month with 20% income tax relief or €500 per month (with higher 40% rate income tax relief). By the time you retire that could give you more in pension benefits compared to the average savings plan.
Unlike a savings plan, you cannot access your pension fund until you reach retirement age. At retirement you can take part of your pension fund as a retirement lump sum. The remaining balance can be used to provide you with an ongoing pension income. (Source Irish Life)
For more information talk to one of our expert pension advisors today
Tel: 091 788000 www.hcgroup.ie
|Warning: These figures are estimates only. They are not a reliable |
guide to the future performance of your investment.
|Warning: The value of your investment may go down as well as up.|
|Warning: If you invest in this product you may lose some or all of the |
money you invest.
|Warning: If you invest in this product you will not have any access to|
your money until age 60 and/or you retire.