Government tax relief on pensions

Just like in sports, where strategy and teamwork lead to victory, understanding how pensions work can help you score big with some free money from the Government. Let’s break it down!

The game plan: understanding pensions

A pension is like your retirement savings game plan. You contribute a portion of your earnings, and over time, this money grows, ensuring you have a comfortable retirement. But here’s the kicker – the Government steps in as your financial teammate, offering tax relief on your contributions. 

The Government assist: tax relief

Think of tax relief as an assist in football. When you contribute to your pension, the Government gives you a helping hand by reducing the amount of tax you pay. For example, if you’re in the: 

• 20% tax bracket and you contribute €100 to your pension, the Government refunds €20 to you. 
• If you’re in the 40% tax bracket, they refund €40. 

That’s free money!

The power play: employer pensions contributions

Now, let’s talk about employer contributions. Imagine your employer as your star player, stepping up to boost your pension pot. Many employers match your pension contributions up to a certain percentage. This means if you contribute 5% of your salary, your employer might also contribute 5%. It’s like doubling your score with minimal effort!

The winning strategy: maximising pension contributions

To make the most of this opportunity, it’s crucial to maximise your contributions. The more you put in, the more you get back in tax relief². You and your employer contributions will help your pension retirement pot become even bigger. It’s like training hard and putting in the extra hours to ensure victory on match day.

The long game: bigger pension fund with compound interest

Just like in sports, where consistent practice leads to improvement, regular pension contributions can benefit from compound interest which may lead to a bigger pension fund for you to retire with. Over time, your fund may grow, thanks to the returns earned on both your and your employer’s contributions and the Government’s tax relief. It’s a winning formula for a secure retirement.

The final whistle: start your pension savings early

The earlier you start, the better your chances of winning the retirement game. Starting young allows you to take full advantage of compounding and Government incentives. It’s like getting a head start in a race – the sooner you begin, the further ahead you’ll be.

Coach’s pep talk

Remember, paying into a pension isn’t just about saving for the future – it’s also about making the most of the free money the Government offers. With tax relief, employer contributions, and the power of compounding, you’re setting yourself up for a winning retirement. So, lace up those financial boots and start contributing to your pension today. Your future self will thank you!

Your Financial Broker – the best place to get your pension in shape

In a recent Brokers Ireland Survey, those who sought pensions advice tended to have much bigger pension pots compared to those that didn’t¹. So, if you're thinking about your pension, it's definitely worth considering speaking to a Financial Broker to make sure you're on the right track.  They’ll help you create a personalised pension plan to help you build a secure retirement and safeguard your hard-earned money.

1. Source: Brokers Ireland Survey July 2023 ‘The value of advice’. The average pension pot of those who sought pensions advice from a financial broker was €130,525 compared to €84,230 for those who didn’t seek advice.
   
   This article is not intended to give advice or a personal recommendation. If you'd like a personalised recommendation based on your circumstances, you should speak with a financial broker.  You can find a financial broker on brokersireland.ie.
2. Subject to revenue limits.