07 December 2016
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Why set up a pension?

After you've retired you'll still need an income. A pension can provide you with that. The state pension provides some level of income, but if you're looking for more than that will need another pension of your own.
It's quite simple: a pension can help towards a comfortable retirement.
The basic state pension is approx €200 euro per week. Some people may find this is barely enough to pay for food and bills let alone foreign travel, birthday and Christmas presents and all those little extras that make life enjoyable.
If you would like to enjoy a similar standard of living in retirement as you do now, you will need to plan for it. A pension plan is one way of helping you do this, and generally, the earlier you start making contributions, the better. Even a short delay can have an impact on the amount you could receive when you retire but you should still remember that the value of your pension fund can go down as well as up and is not guaranteed. This means that you could get back less than you invest.
It could be a move to set up a pension, but how much money will you need to pay in?
This will depend on a number of things - for example, when you want to retire, how old you are now, the income you would like to get after you've retired and, of course, how much you can afford to contribute.

What pension options are open to me?

There is a wide range of pensions to suit almost everybody's needs
The types of pension available can be generally split between personal and company pensions. The main difference is that a company pension is set up for you by your employer (although they won't necessarily be paying into it for you).
Traditionally, company pension schemes provided a pension based on your salary at retirement and how long you'd been a member of the scheme. These are called 'defined benefit' or 'final salary' schemes.
Many companies still operate this kind of scheme for their employees, but most new pensions are set up on a 'money purchase' basis. This means that the money paid into the pension is invested for the benefit of the policyholder (the employee). This is called the pension fund. When you retire, the money that has accumulated in the fund is usually used to buy an annuity (an income for life) for you, or to provide a tax free cash sum of up to 25% .
The income is taxed as pension income and the tax paid will depend on your income tax rate at the time the pension is paid. You should remember that the value of your pension fund can fall as well as rise and is not guaranteed. This means that you could get back less than you put in.

Why was so much lost in the credit crunch?

It is extremely important that your pension fund is invested wisely. It is hard to believe that funds have lost so much money during the recent credit crisis. Once the sub prime crisis started to raise its head, pension fund managers should have headed for cash. Unfortunately many just sat there watching values fall and still charging us fees for the pleasure.