Pension on a Low Income

oEmmao

I have looked for this answer, so apologies if it has been asked before.

I am on a very low income (part-time) under 12k a year.

Is there a way for me to pay into a pension? I would be able to put a little aside, as hubby works full-time.

I have a 7.5k pension somewhere from when I worked full-time.

Is a pension not an option now as I earn so little? Thanks everyone.

Bass Reeves

At present you would be better of investing in savings funds outside of pensions. If you put funds into a pension the money will be locked up access wise and there are rules regarding its withdrawal. As at 12k income you will have no tax relief or only at 20% if your spouse has half your income tax allowances you be as well investing outside the confines of a pension fund.

oEmmao

I have a small amount in peer to peer lending, but not sure what to do next that doesn't have huge tax implications.

Chuckie_Egg

Would depend on your tax free allowance(TFA) and your tax setup. If your Husband has your TFA then you are paying tax on the 12k so it would be well worth your while paying into a pension as you would get the tax benefit.
There are a few other benefits from your own private pension but plenty of hungry pension providers will answer your questions better.

oEmmao

Chuckie_Egg wrote: »

Would depend on your tax free allowance(TFA) and your tax setup. If your Husband has your TFA then you are paying tax on the 12k so it would be well worth your while paying into a pension as you would get the tax benefit.
There are a few other benefits from your own private pension but plenty of hungry pension providers will answer your questions better.

so at the moment, with hubby having most of the tax credits, i pay about 10euro a week in tax.....

blindside88

You can contribute to a pension even if you’re not paying income tax. Whether it is an efficient use of your money is another matter. As others have said there are pros and cons of investing in a pension and a regular premium investment. The big differences between the two are how your funds are treated for tax (on initial investment, on growth and on exit) and when you will have access to your funds.

Chuckie_Egg

If that's all the Tax you are paying then there is no real benefit. Pensions in Ireland are really only a way of avoiding paying Tax.
Just make sure you are getting a full prsi stamp put up for your part time job.
I wouldn't be a fan of the peer 2 peer lending, it's not a well regulated industry and getting riskier by the year.

Bass Reeves

Chuckie_Egg wrote: »

Would depend on your tax free allowance(TFA) and your tax setup. If your Husband has your TFA then you are paying tax on the 12k so it would be well worth your while paying into a pension as you would get the tax benefit.
There are a few other benefits from your own private pension but plenty of hungry pension providers will answer your questions better.

One Spouse cannot use all of a second spouses tax credits. There are two parts of your tax credit. Your personal and PAYE/self employed credit. You can transfer the personal credit but not the PAYE/self-employed credit.

Technically OP pays 20%tax on all 12k and the credits are deducted from the tax burden. The two credits are approximately the equivalent of the tax on 8.5k of OP's income

However OP is also limited by pension contribution percentage rules depending on there age.
https://www.pensionsauthority.ie/en/lifecycle/tax/tax_relief_on_contributions/

Because if the inflexibility of smaller pensions and in the earlier if you retirement you will be more likely to want to take them special holidays etc saving outside of a pension may be more beneficial.

You can still use longterm pension type investments. However if you access the money pre 65 you will pay DIRT tax. I am not sure if there is tax relief on dirt for lower earners

cooperguy

oEmmao wrote: »

so at the moment, with hubby having most of the tax credits, i pay about 10euro a week in tax.....

Instead of you paying into a pension your husband should increase his contribution by the same amount which would give you the tax benefit

Sunrise_Sunset

cooperguy wrote: »

Instead of you paying into a pension your husband should increase his contribution by the same amount which would give you the tax benefit

This is a good idea and I plan on doing this too as my own employer doesn't offer a pension scheme whereas my husband's employer has a scheme with a great employer match.

oEmmao

hubby is maxing out his contributions for his age