Many could abandon their pension as a savings tool for retirement
Those using a pension scheme to prepare for retirement face high fees when the time comes to draw down hard earned cash. What may seem small percentage rates at face value adds up over the lifetime of an individual’s pension account, a point recently made by the Minister for Social Protection, Joan Burton. While she may be doing a service to those who want an informed decision before starting a pension, highlighting this fact could scare people off investing in savings that will sustain their standard of living after retiring from work.
Nobody can deny the weak performance of pensions in recent years. And the decisions taken to bridge the ever-growing future pensions gap is giving the Government serious food for thought as to how to deal with the issue. The impending Budget could be subject to more adjustments that aim to cut back on the deficit. One avenue being considered is cutting the tax relief currently afforded to those with retirement funds. Couple this prospect with the Government levy that takes €470 million annually from pensions, it is unsurprising that a negative outlook towards pensions has developed.
Scrapping tax relief will hit the approximately 550,000 workers around €800 a year. Capping tax relief to €60,000 a year has also been put forward as an alternative but that would impact the country’s top earners. However, this does not hide the fact that people need to be prepared for the financial changes retiring brings. If you are having doubts about your pension and want the best return possible on your retirement investment, why not get in touch with one of our financial advisors either by calling 1850 746 759 or e-mail us to discuss your requirements.