The power of upgrading your pension

In today's rapidly changing economic landscape, planning for retirement has become more crucial than ever. We are living longer and our aspirations for retirement are evolving, meaning actively managing and upgrading your pension plan is more important than ever.

According to a survey by iReach Insights on behalf of Zurich, which examined the attitudes of adults towards paying into a pension, €28,257 is the average amount expected annually to lead a normal life after retirement*.

Do you know how much is currently in your pension? This is why it’s so important to regularly monitor.

Wayne O'Neill, Executive Financial Planning Manager at Zurich, says, “As we're all living longer, it's even more important to constantly, at least annually, monitor your pension to ensure that the benefits will be sufficient.

“I think there can be a perception that if you are enrolled in a pension arrangement, there's nothing more that needs to be done. The opposite is the case. It is vital to keep an eye on your pension funding and consider increasing your contributions whenever possible."

With plenty of options, upgrading your pension plan can help you secure a more comfortable future.

Why upgrade your pension plan?

You might have set up your pension a while ago and not thought of it since. But what seemed like a solid plan a decade ago might not suffice today. Upgrading your pension can mean switching to a new plan or ‘topping up’ your contributions.

Upgrading your pension plan ensures that it aligns not only with current market conditions, but also with your personal circumstances, offering peace of mind for the future.

When it comes to assessing your current pension plan, Wayne points out key elements to check to see if your plan is working hard enough for you.

These include looking at how your pension stacks up against average returns in the market, understanding management and service fees, and other hidden costs, and whether you are making enough contributions for the retirement fund you want to have.

Wayne adds, “Charges are a key factor and should be constantly under review."

But what are some of the real benefits of upgrading your pension:

1. Enhanced returns - Increasing contributions could potentially lead to higher returns over time.
2. Improved fund choices – Switching to a different pension plan with a provider that has a history of strong investment performance, for example, Zurich, means you could potentially have more personalised and more profitable investment strategies**.
3. Increased flexibility - Whether you're close to retirement or planning ahead, you can get a range of flexible plans. From topping up existing pensions to switching your plan entirely.
4. Adaptation to your life changes - As your life circumstances change, your pension needs might also change. Upgrading your pension can ensure that your retirement savings are set to your current and future needs.

Wayne also sheds light on the tax benefits.

“Pensions offer the benefit of tax-free growth on the investment, return on the invested funds, and the ability to then draw down a portion of your pension as a tax-free amount.”

For example, if you're paying tax at a 40pc rate and you put €100 into a pension, you get €40 subsidised.

“Your financial planner will initially assess your existing plan and discuss the options available to ensure that your pension stays on track over the long-term. There are great support tools available to check your pension, like the Zurich online portal and pension calculators.”

Getting advice

But the thought of tinkering with your pension plan can be off-putting. A common barrier to pension upgrading is the concern that it’s complex, risky, or might not even offer significant benefits.

Wayne acknowledges that discussing pensions can sometimes feel intimidating and “customers can feel that it's too complicated to address their pension or talk about a pension.”

However, he says that "your pension fund is such an integral part of your overall financial well-being that it is crucial to stay engaged. We have online contact options which makes it easier for clients to speak with us and sign up.”

Upgrading your pension can be a straightforward process, especially with the assistance of a Zurich financial advisor. Concerns about risks can be addressed by speaking with the experts and choosing a plan that matches your risk tolerance and financial goals.

"As we begin a new year, it's the ideal time to take action and reach out to Zurich or your financial advisor to assess whether your current pension plan is adequate."

Taking a small action today and speaking to Zurich or a financial broker could have a great impact on your future. With a wide range of options, control and flexibility, you can choose a pension plan that’s right for you. If you’re wondering where to start, you can find a local financial advisor near you with the Zurich Advisor Finder.

*Source: iReach pension survey, August 2023

**Financial strength rating is for the Zurich Insurance Group, source: Standard & Poor's, January 2024.

The information contained herein is based on Zurich Life’s understanding of current Revenue practice as of 1st February 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.

Find an advisor   Contact Form   Call 0818 804 164