Why You Need to Ask Your Employer About Your Work Pension

two retirees sitting on a bench looking out to seaIn Australia, and now in the UK too, when you start a job you are automatically enrolled in a pension. Auto Enrolment it’s called.

Each new employee has the option to sign out of the pension but very few actually do it. Most think the idea of a pension is a good thing, I do too. Most people feel “well, I am not used to having the cash anyway, so I’ll quickly get used to not having it and if that means I then have money when I retire then ok!” They are good with that, makes perfect sense.

In Ireland, the landscape is entirely different. Employers are not obliged to enroll their employees in pensions. Pity.

As a result, very few wake up on a Monday thinking, “must sort out that retirement today!” So, the inevitable happens. Time is lost, life happens and affordability is always a concern because the challenge is now to spend money you have instead of spending money you never had. So, the pension coverage is Ireland is really poor in comparison. A real pity.

There are other factors of course. Jargon being one of them. As human beings who are consistently being sold to, it’s very difficult to buy into something without understanding it. But how can you understand something in an hour that took me 10 years to fully get my head around? So now you have to trust someone who knows what they are talking about. How do you find one of those? Word of mouth… aaaahhh! By the time you actually get this sorted years have typically slipped passed. A real bloody pity.

That is why pensions in Ireland at a basic level have poor levels of uptake and as a result too many people retire here without enough money.

Ultimately the people who are missing out are the people without the pensions in place often normal people like you and me.

One step the Government has taken to attempt to increase the pensions coverage in Ireland is to make employers provide access to a pension scheme to their staff. It’s an offence for an employer to not provide access to a pension plan to their staff and to facilitate the payment of this plan through their payslip.

So ask!

Lots of employers will have schemes in place, some will have PRSA’s in place and lots of others will have none.

If you would like to start to put a few bob away for retirement, your payslip is the easiest place to do it. So ask.

The key point is that you should not be one of the ones that falls into the trap of missing out on the tax breaks that are available to you. So just ask!

Take care,
Nick

Hold on to your Pension!

New Beginning have for years advised clients on their debt options and since we have added a regulated financial advisory service to our offering one particular issue comes up time and time again.  What will happen to ≠my pension if I go bankrupt or if I enter an insolvency process?

Well, bear in mind that all situations deserve their own individual attention, but I can give you some guidance on how pensions are generally treated.

Pension money is ring fenced insofar as it is not readily available. If you are about to retire or indeed could retire in the next 5 years it is very important that you consider what form your pension assets are in. Pensions come in various shapes and sizes and as such it is vitally important that your pension is structured in the most favourable way for you to retain control of your retirement savings.

Pension’s law in Ireland allows client’s access to their retirement assets from the age of 50 all the way up to 75 depending on the plan type you are in. Now if you happen to be in a pension arrangement that allows access to your money at 50 and you are approaching or over 50, then it might be advisable to move it to a different pension arrangement that doesn’t allow access until you reach 60 for example. Indeed you might simply be able to change the retirement age of your existing plan with the stroke of a pen. This could mean the difference between holding onto your retirement savings or not.

Also consider what form your pension is in? Is it a cash fund or is it income? Reasonable Living Expenses guidelines allow clients to have a certain amount of income but not cash assets. If you have €200k of a fund at retirement, this could be converted into an annuity which will deliver a client a regular income for life. Many would consider the annuity rates today to represent bad value for money, and I would absolutely agree with them. However if I faced a decision between losing all of my €200k or keeping an income of say €10k every year for the rest of my life, all of a sudden an annuity starts to look like a very attractive option.

There are many different scenarios and many different solutions. Far too many to cover here. But in summary if you are considering entering a debt process and have a pension fund built up, it is imperative you seek advice. It could be the difference between you holding on to your pension or losing it in its entirety.

If you would like to discuss your own pension situation, please feel free to get in touch with me directly on email on nick.lawlor@newbeginning.ie or contact the office on 01-5240000 and I would be happy to look at your situation to find out.