Retirement Planning Donegal – Retire with Financial Freedom!

The first thing to do is contact your Financial Broker or provider, if you don’t have an advisor find one you feel comfortable with, I would suggest one that charges a consultation fee, that way you will get advise rather that one that wants to sell you something..

You are welcome to give us a shout

Your advisor will make contact with your provider to prepare and issue your retirement options pack, which will include a claim form. Once received your Financial Advisor and you can discuss which option is best for you.

If you have to retire early due to ill heath you should be able to take your pension benefits as soon as that happens. If you are a member of an employer Pension Scheme the Trustees of your Scheme will have to sign off on your ill health. If you are a member of a Personal Pension or PRSA your ill health claim will need to be admitted by your provider.

An annuity is a contract with a life assurance company that will pay you a regular pension income for the rest of your life in return for you paying them a lump sum when you retire. The amount of pension income (annuity) you receive will depend on many factors such as the size of the lump sum, annuity rates at the time, your age, whether it is payable for a set period and/or includes a dependant’s pension and state of health. You do not have to take the annuity with your current provide and it is very important to shop around as annuity rates can defer greatly.

If you have a Personal Pension or an Individual PRSA you can take your benefits from age 60. You do not have to retire to take your pension benefits. Some occupations such as fishermen, firefighters and jockeys can retire earlier.

If you are a member of an employer Pension Scheme then, subject to the rules of the scheme, you may be able to take your benefits at any time after your 50th birthday. If you do so between age 50 and 60, you must retire from your job. From age 60 you can continue to work and take your benefits at the same time. There are specific rules relating to company directors though.

An Approved Retirement Fund is a personal investment fund where you can keep part, or all of your pension invested as a lump sum after retirement. You can withdraw from it regularly to give yourself an income. It also enables you to pass on the remaining value of your fund to your dependants when you die. There are eligibility criteria and not everyone can access the ARF option. You should speak with your Financial Advisor if you have any queries.

Depending on the type of pension arrangement you have, there will be limits as to how much you can contribute to your pension plan. However, in all cases there is an overall standard pension fund threshold of currently €2 million. We recommend that you seek professional financial advice if you wish to maximise the value of your pension fund before retirement.

This will depend on whether to die post or pre-retirement.

If you die before retiring your pension fund will be paid to estate, if you die after taking your retirement options than it depends on whether you have selected an Annuity or an ARF

Annuities are guaranteed for 5 years, so if you die before the 5^th year the income will continue to be paid to your next of kin up to the 5^th year. After that the annuity stops. Before you retire you can choose to extend the guaranteed term to 10 years.

On retirement, if you had selected to invest your pension fund into an ARF than the fund is paid to your estate,

Normally your pension will cease on your death unless you have purchased a pension which is payable for a minimum period even in the event of death.

Pension payments are subject to income tax at your marginal rate and USC deductions under the PAYE system. PRSI (up to age 66) may also apply. Your provider will make these deductions at source based on your rate of income tax and will remit them to the Revenue Commissioners on your behalf.

If you take part of your pension as a free lump sum, you are free to do what you want with your lump sum. One of the options available to you is to re-invest part or all of your money for your future. You should seek advice to help you select the investment fund options designed to meet your needs. There are a range of investment funds from very low to very high risk funds.

When you die, the remaining value of your ARF is available and can be left in your will as part of your estate. The proceeds can also be transferred into an ARF in your spouse’s/civil partner’s name.

Not necessarily, you should be able to purchase your Annuity from any provider. You should check if there is an “open market” option available to you and if so, speak to your Independent Broker or for further information. It is worth shopping around for the best annuity.

When you purchase an annuity pension, you have the comfort of a secure income for the remainder of your life. When you buy an ARF, there is no guaranteed income and the length of time that your fund will be available depends on the withdrawals you make, and the investment growth achieved by your fund.

For example, if a high level of withdrawals were made relative to the growth achieved, there is a risk that your fund could run out before death – and the longer you live, the greater the chances of this happening. You should also note that, in order to achieve good returns, it is likely that an ARF will invest at least partly in assets such as shares, bonds and property. The value of these assets may fall as well as rise, particularly in the short term.

To set up an Approved Retirement Fund you must have a guaranteed pension income of at least €12,700 per annum or have invested €63,500 in an Approved Minimum Retirement Fund (AMRF) and/or Annuity.

Similar to an ARF an AMRF is an investment fund which is personally owned by you. It has the following features:

• Any investment growth achieved can be accessed at any time and this is subject to taxation.
• An AMRF becomes an ARF on the individual reaching age 75 or earlier death.
• An AMRF also becomes an ARF on the individual satisfying the minimum guaranteed income requirement.

The simple answer is you are never too young to prepare for retirement. I know, I know, we would say that wouldn’t we! But it really is the case.

Pensions really do matter to all of us. This is more so because of a raft of changes that have taken place over the last two decades.
To begin with, the medical experts predict that we will all live longer.
Whether it is as a result of taking better care of our bodies, advances in medical research or innovations in pharmaceuticals, people are living longer. So, the income you will have when you retire wouldbe greatly influenced by saving a little as early as you can.