When is the best time to start a pension plan?

Pension fund| savings piggy bank

What is a pension?

A pension is a long-term savings plan that helps you save for retirement in a tax efficient manner.

We are living longer these days in comparison to previous generations. As a result, most of us can now look forward to 20 or even 30 years of retirement. With the time spent in retirement increasing, it is important to have a pension plan in place in order to maintain your lifestyle and enjoy these years.

Pensions have been a topical discussion for years now. The Government fears that many people in Ireland will potentially face poverty in retirement unless steps are taken to provide for their ‘golden years’. The current state pension is €12,695 p/a. This would not be a sufficient income for most to live on.

Reports show that less than half of all workers in Ireland have an occupational or private pension. While the majority of public sector workers have an occupational pension, the same is true for just one-third of private sector employees.

Minister for Employment Affairs & Social Protection, Regina Doherty recently stated that “it is increasingly evident that most Irish workers are not saving enough, or indeed at all, for their retirement years and many people will be faced with a serious reduction in their living standards when they retire”.

Never too early to start…

Getting back to the question posed in the title, the best time to start making payments to a pension plan is now! Contributions made today will have grown by significantly more when you reach retirement age, than a similar contribution made in 5 or 10 years time.

If you have no pension plan in place you should give serious consideration to setting up a plan immediately, with an affordable contribution level. Payments can always be increased in the future. Some people fear that if they start now they may not be able to maintain the same level of payment in the future. Pensions are extremely flexible in that regard and one can increase payments, reduce payments or even suspend payments as dictated by their circumstances at any given time. No matter what plan you have, it is recommended that you regularly review your pension as your circumstances may change over time.

Tax Benefits

And remember, what makes pension plans more attractive than a regular savings account is that they carry exceptional tax benefits. Firstly, contributions are fully tax deductible so if, you pay tax at the 40% rate the revenue commissioners will refund you 40% of the contributions you make. For example, a €1000 contribution to the pension fund will cost you €600 if you pay tax at 40% rate. Secondly, all growth achieved by your pension fund is accumulated free of tax so there is no tax on any profit or gain.

As with most other financial products, one size does not fit all. There are many options depending on whether you are in employment or self-employed, a sole trader or a company director. Therefore, it is important to get informed, professional advice before committing to any arrangement.


For further information on any aspect of retirement planning call McGuire Liston Financial Services 064 663225  (Killarney) or 066 7106202 (Tralee) to organise a FREE consultation.


Contact us today. • Killarney T: 064 663 2255 E: killarney@mcguireliston.ie • Tralee T: 066 7106202 E: tralee@mcguireliston.ie