would like some pension advice please
I currently pay 115euro every 2 weeks into a pension scheme.
This is matched by my employers.
Some good maths means I pay 230euro per month.
I'm embarassed to say i have only a vague idea how pensions work, but i'm guessing whatever fund my money has been put into has probably diminished ( i havent seen a statement from pension company in ages - is this normal)...
Which leads me to my question, should I reduce/stop these payments and just save the remainder which will appear in my paycheck...i dont know if i can work out what this will be... i believe i get some kind of tax relief on my pension contribution...
thanks for any advice
Your employer is matching your pension 100% and you want to reduce your contributions! You should get some figures from your pension company and play around with a Pension Calculator, you may end up wanting to double your contributions.
You also get tax relief on your contributions. So if you're a 41% taxpayer, your €115 per fortnight is costing you €68 per week. So for a net cost of €68 per fortnight, there's €230 per fortnight going into your pension fund.
In addition, investments in a pension fund are themselves tax-free, so the fund manager doesn't pay DIRT tax, Capital Gains Tax or income tax on the gains from any investments they make.
That said, it's not all a give-away. Your pension fund is locked up with no access until retirement. The pension fund manager is presumably getting some fees for managing your fund. You may be taxed on some of your pension when you retire.
You should get a statement at least once a year and more often on request. As regards the funds, you should ask the company's pension advisor to talk you through what pension fund(s) you're currently invested in and if there are alternative fund options that might be more suited to your own preferences.
Thanks for replies & advice - i will contact pension company and ask for a statement
Liam - can u explain these figures please?
I am in 41% tax range.
My question about whether a pension is worth it comes about as I would like to start saving some money...i believe the money I dont put into my pension will be liable for 41% tax? (that correct?)...based on this, any idea what i might be getting nett if I postpone pension payments for a period and start saving??
Your contribution of €115.00 per fortnight should qualify for tax relief at 41%. So the tax relief should be €115 x 41% = €47.15. So your take-home pay should be reduced by €68 (€115 - €47) in respect of your gross contribution of €115. On top of that, there's another €115 going in from your employer.
So the total pension contribution is €230 but the cost out of your take-home pay is €68.
If you decide to save instead, you'd be able to save €68 per fortnight, instead of €230 per fortnight going into the pension.