Myth: I already have a pension, I don’t need to do anything else

We all know we need to plan ahead, whether it's reserving a table in your favourite restaurant or ensuring you have a comfortable retirement. While many of us have ticked the box of setting up a pension, how many of us truly understand its performance and potential?

Just having a pension isn't the endgame; ensuring it's working hard enough for you and knowing it will give you the lifestyle you want in retirement is. It’s important to be realistic about the retirement you want and if your current pension contributions will get you there.

When was the last time you checked in on your pension? At least once a year you service your car, go to the dentist, even declutter the house. But do you review your pension each year to see how it is performing or if your contributions will be enough for your future in retirement?

Many people start a pension and forget about it, but it’s important to think about how much you are paying into your pension, how the fund is performing and what the investment returns are. It's not just about the annual statements that arrive in your post, email or online account. To understand if your pension contributions are enough to sustain your lifestyle in retirement, regularly review your pension and seek expert advice to ensure it's working hard enough for you.

Consider a pension top-up

Having a pension is all about providing enough money to live off in retirement. But what happens if you realise your pension contributions won’t deliver the lifestyle you want at retirement?

Topping up essentially means increasing your pension contributions, or making a lump-sum contribution to help you reach your retirement goals.

This chart assumes an investment growth rate of 4.6% per annum based on the Prisma 4 fund. This rate is for illustration purposes only and is not guaranteed. Actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated. A normal retirement age of 66 has been assumed for the 45 year old example customer. The figures for the Projected Values are based on: a) the Gross Investment Returns stated. The assumed Gross Investment Returns are not forecasts because, the value of units may grow at a faster or slower rate than assumed and the value of units may be expected to fall from time to time as well as rise;  and b) an annual management charge of 1%.

Tax advantages

One of the major advantages of pension contributions is their tax efficiency. In contrast to a standard savings account, eligible contributions to a pension plan can benefit from tax relief.

And while starting early is preferable, it's never too late to start or top-up your pension. In fact, the older you get, the more you can put in, as there are different contribution limits for tax relief for older people. For example, someone aged 34 could put 20% of their annual income into their pension and save tax. But if aged over 50, the limit rises to 30%. It rises again to 40% if over 60.

Another advantage is that you can backdate your contributions to avail of tax relief for the previous year. This feature becomes especially valuable as people approach the tax deadline. With the tax deadline of 31st October (or 14th November if you are filing online) fast approaching, now is the time to take action and consider topping up your pension.

Review your options

A yearly review of your pension strategy is necessary to ensure it aligns with your future financial goals. Regular reviews will help you see if you need to top-up and allow you to consider whether it may be beneficial to switch providers to get better investment performance from your pension.

Zurich offers a range of pension products tailored to various needs. One popular product is the Personal Retirement Savings Account (PRSA). It’s straightforward, has minimal charges, and provides a full range of options for investment. If you have a PRSA or a personal pension, you can increase the level of contributions you are making or take out a new arrangement.

But before you switch or top-up your pension, seek advice. Get in touch with a Zurich financial planner or find a local financial advisor near you with the Zurich Advisor Finder to talk about your options. 

If you are a Zurich customer, you can login to the online client centre to track your pension performance and find out how to increase your contributions. You can also use the pension projection tool to see the value at retirement of your current pension pot and the projected value if you top-up.

Top-up online   Find an advisor

The information contained herein is based on Zurich Life’s understanding of current Revenue practice as at September 2024 and may change in the future.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.

Sources:

₁Investment Excellence Award, Brokers Ireland, 2014, 2015, 2016, 2017, 2018, 2019, 2021, 2022, 2023. No awards held in 2020. Pension Provider Excellence Award, Brokers Ireland, 2023, 2022. Fund Management Company of the Year 2023 Award, Business and Finance Financial Services Awards. Life Assurance and Pensions of the Year, InBUSINESS Recognition Awards, 2024.

₂Zurich, 30th June 2024.