Pensions Planning for your pension –

How is your pension doing?

Not sure? Then how will you know what your retirement’s going to look like? Keep your future on track with regular pension reviews.

Please Note: The calculator and all of the illustrative figures are provided by Friends First and are estimates only. It has been designed to provide guideline indicators on your protection requirements. It is recommended that you speak to your broker before buying any financial product.

What’s the best way to save for your retirement?

There are multiple ways you can save for your retirement, but only one is designed with it specifically in mind; a private pension. Many people are reluctant to delve into the world of pensions as they appear complicated and daunting from first glance. However, a pension is just another type of saving plan, one that you invest in regularly. Once your retirement date comes along, this fund becomes accessible and allows you to live comfortably throughout your Autumnal years.

However, one needs to be aware of the type of investment risks you are undertaking as you near retirement.

What Age Are You?

The suitability of an investment for you depends heavily on your age, and how long you have until retirement. For example, someone in their twenties or even early thirties will want to achieve as much growth as possible and may invest in more dynamic or aggressive funds. However, if you are only a few months from retirement, you’ll want to safeguard your hard-earned money in a fund with little to no risk at all.

Under 40 years
Under 40 Years

40+ years
  40 Years Plus

50+ years
50 Years Plus

60+ years
60 Years Plus

How much should you contribute to your Pension Fund?

That should depend on your age and the number of years you should fund for your retirement. The Government gives generous tax relief on pension contributions depending on your age as follows:

The answer to this depends entirely on your age and the number of left until retirement. Thankfully the Government offers generous tax relief on those contributing to their pension, varying on what age you are.

Income Tax Relief is available based on the following limits (net relevant earnings):

Age Income Tax Relief (%)
Under 30 15%
30-39 20%
40-49 25%
50-54 30%
55-59 35%
60+ 40%

Example: a high rate tax payer who invests a gross amount of €1,000 in their pension fund avails of tax relief of €410 giving a net cost of €590.  20% relief for a standard rate tax payer.


However, there are some basic investment rules that apply universally to everybody saving for retirement:

The majority of financial experts agree that the optimal way to invest in your pension is called Asset Allocation. This involves having a variety of asset clauses such as stocks, shares, property, government gilts, cash deposits and other alternatives. Therefore, if one aspect of your fund performs poorly, the remainder is far more likely to perform better.

You also need to think about how long you have to save. The amount you invest in each asset class is affected by the length of time you have to save. For example, someone in their twenties might aim to achieve maximum growth by investing more in equity funds.  On the other hand, an investor with only a few months to go until they start taking their pension benefits might favour less risky investments such as cash.

Are you prepared to take an Investment Risk?

All investments have an unavoidable amount of risk involved. The value of investments can rise and fall, you may get back more than you invested, but you may also get less. The more risk you are willing to take, the higher chance of potential return, but there’s also a higher chance of loss. Lower risk investments offer a safer alternative but have lower potential returns. You need to choose which investment suits your risk tolerance and your needs. Fortunately, we here are UFS are happy to help.

How often should you review your investment?

You should schedule your pension review at least once a year. This helps to both track the status and performance of your funds but also helps to ensure that your investment strategy still matches your needs. Regular reviews also make forward planning far easier, helping to avoid market falls. It will also allow you to take advantage of growth opportunities and further grow your pension fund.

How much do I need to contribute?

One of the most important parts of planning for a pension is having a realistic outlook. Analyse your Annual Benefit Cert as included is a statement of Reasonable Projection. This will show you your estimated pension if you continue investing at your current rate. Ideally, the calculation should state your projected retirement income will be roughly 66% of your current income. Unfortunately, few people achieve this level of income.

If you don’t have a statement at hand, then you should always assume “as much as possible as soon as possible.” A good rule of thumb is to invest an amount equal to half your age. So if you’re 30, you should be investing 15% of your earnings.