The Power of Upgrading Your Pension
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Many of you might have a pension quietly humming away in the background, but have you ever stopped to consider the benefits of an upgrade? This article was first published on Independent.ie.
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, making it essential to actively manage and upgrade your pension plan.
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 it.
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.
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Why Upgrade Your Pension Plan? You might have set up your pension a while ago and not thought about 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 assessing your current pension plan, key elements to check include:
- Comparing your pension’s performance against average market returns.
- Understanding management and service fees, and other hidden costs.
- Evaluating whether you are making sufficient contributions to meet your desired retirement fund.
Benefits of Upgrading Your Pension:
- Enhanced Returns: Increasing contributions could potentially lead to higher returns over time.
- Improved Fund Choices: Switching to a provider with a history of strong investment performance, such as Zurich, could offer more personalised and profitable investment strategies**.
- Increased Flexibility: Whether you’re close to retirement or planning ahead, you can find a range of flexible plans. From topping up existing pensions to switching your plan entirely.
- Adaptation to Life Changes: As your life circumstances change, your pension needs might also change. Upgrading your pension can ensure that your retirement savings are aligned with your current and future needs.
Wayne also highlights the tax benefits of pensions, stating, “Pensions offer the benefit of tax-free growth on the investment, returns on the invested funds, and the ability to draw down a portion of your pension as a tax-free amount.”
For example, if you’re paying tax at a 40% 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.”
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Getting Advice 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 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 emphasises 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 make 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 financial advisor like Alan McCarthy. Concerns about risks can be addressed by speaking with 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 a financial advisor to assess whether your current pension plan is adequate.”