Aoife Obrien, Author at askpaul™

Ireland's 2025 budget was unveiled on 1st October 2024, allocating €10.5 billion to key sectors such as health, education, transport, and environmental sustainability. This article breaks down the key updates on taxes, one-off payments, cost of living supports, energy cost help, social welfare, health, housing, education, jobs, and more. Some of these changes will kick in right away or by the end of 2024, while others start from January 2025 or later in the year. A few still need to be finalised before they take effect, and some details might shift once the necessary laws are passed to make them official.

Tax Credits:

Personal, Employee, and Earned Income Tax Credits will each increase by €125, raising them to €2,000.

Blind Tax Credit increases by €300 to €1,950.

Dependent Relative Credit rises by €60 to €305.

Home Carer Credit increases by €150 to €1,950.

Incapacitated Child Credit increases by €300 to €3,800.

Single Person Child Carer Credit increases by €150 to €1,900.

Rent Tax Credit increases by €250, bringing it to €1,000 for 2024 and 2025.

Universal Social Charge (USC):

The 4% rate is reduced to 3%.

The income range for this rate will apply to earnings between €27,382 and €70,044.

Capital Acquisitions Tax (CAT):

Group A threshold increases to €400,000.

Group B threshold increases to €40,000.

Group C threshold increases to €20,000.

Vacant Homes Tax:

Increased to 7 times the Local Property Tax (LPT) rate, up from 5 times.

Small Benefit Exemption:

Increases to €1,500 (from €1,000), with up to 5 non-cash benefits allowed per year (up from 2).

Carbon Tax:

Petrol and diesel carbon tax will increase from €56 to €63.50 per tonne on 9 October 2024, with other fuels affected from 1 May 2025.

VAT:

VAT on heat pumps reduced to 9%.

9% VAT on gas and electricity extended until 30 April 2025.

Excise Duty:

Increase of €1 on a packet of 20 cigarettes from 2 October 2024.

Excise duty on e-cigarettes starting mid-2025 at €0.50 per ml.

Additional Measures:

CervicalCheck payments will be exempt from income tax, Capital Gains Tax, and Capital Acquisitions Tax.

Once-off Payments (November 2024):

€200 to those receiving the Living Alone Increase.

€300 for Fuel Allowance recipients.

€400 for Working Family Payment recipients.

€100 per qualifying child for people receiving an Increase for a Qualified Child (IQC).

Two double Child Benefit payments in November and December.

A double week payment for long-term social welfare recipients in October (in addition to the Christmas Bonus).

€400 to those receiving Disability Allowance, Invalidity Pension, Blind Pension, or Carer's Support Grant (one payment only, even if eligible for multiple).

Social Welfare Weekly Payments (from January 2025):

All weekly social welfare payments to increase by €12.

Maternity, Paternity, Adoptive, and Parent’s Benefit will rise by €15.

The Increase for a Qualified Child will be renamed Child Support Payment, increasing by €4 for children under 12 and €8 for children 12 and over.

Child Benefit & Family Support:

A Newborn Baby Grant of €280 plus the first month's Child Benefit (€140) for children born from January 2025.

Working Family Payment income limits will increase by €60 per week.

Carers:

Carer’s Allowance income disregard will increase to €625 (single) and €1,250 (couple) in July 2025.

Carer's Benefit will extend to self-employed people.

Carer's Support Grant will increase by €150 to €2,000 in June 2025.

Domiciliary Care Allowance will increase to €360 per month.

Additional Support:

The State Pension (Non-Contributory), Disability Allowance, and Blind Pension means test limit will increase when selling a home to move into care.

Employment programme payments will increase by €12 per week, and the Work Placement Experience Programme will rise by €24 per week.

Free Travel Scheme Companion Pass will extend to all people aged over 70 in September 2025.

New Initiatives:

Jobseeker’s Pay-Related Benefit Scheme starts on 31 March 2025, linking payments to previous income.

Pension auto-enrolment retirement savings scheme begins on 30 September 2025.

Income Tax:

The standard rate income tax band will increase by €2,000, raising the threshold to €44,000 for a single person.

Employment and Business:

The Department of Enterprise, Trade, and Employment will receive €1.03 billion in 2025. Key measures include:

Minimum Wage:

The national minimum wage will rise by 80 cents to €13.50 per hour from 1 January 2025.

Income Tax and USC:

Income tax rates remain at 20% and 40%, but tax credits and income bands will change.

The Personal, Employee, and Earned Income Tax Credits will increase by €125 to €2,000.

The USC rate of 4% will reduce to 3%, with the income threshold raised to €27,382–€70,044.

Supports for Unemployed People:

Weekly payments for Community Employment (CE) and Tús schemes will increase by €12 from January 2025.

The Work Placement Experience Programme (WPEP) payment will rise by €24 weekly.

Small Benefit Exemption:

The tax-free exemption for non-cash employee benefits will rise from €1,000 to €1,500, allowing up to 5 benefits per year (increased from 2).

Supports for Business:

A new €4,000 Power Up Grant will be provided to hospitality and retail businesses for electricity costs before Christmas.

The R&D Tax Credit first-year threshold will increase from €50,000 to €75,000.

The Capital Gains Tax (CGT) Entrepreneur Relief for angel investors will apply to gains up to twice the investment, with the limit raised from €3 million to €10 million.

VAT registration thresholds will rise to €85,000 for goods and €42,500 for services from January 2025.

The Retirement Relief upper age limit will increase to 70, with CGT waived after 12 years if assets are retained.

Supports for Farmers:

Farming tax reliefs such as General Farmer Stock Relief and Young Trained Farmer Stock Relief will continue until 31 December 2027.

Audio-Visual Sector:

A new 20% Tax Credit for Unscripted Productions on qualifying expenditure up to €15 million, pending European Commission approval.

These measures aim to provide financial support to families, carers, pensioners, and individuals on social welfare while addressing cost-of-living concerns.

Education and Training:

Key Initiatives:

Free Schoolbooks: Extended to all Transition Year and Senior Cycle students (September 2025).

State Exam Fees: No fees for Junior and Senior Cycle exams in 2025.

Special Education: Funding for 768 additional special education teachers and 1,600 extra special needs assistants (September 2025).

Smartphone-Free Schools: Funding for a "Keeping Childhood Smartphone-Free" initiative in post-primary schools.

Hot School Meals: Extended to all primary schools starting April 2025, with a pilot summer project in 2025.

Student Supports:

Student Contribution Fee: Reduced by €1,000 for the 2024/25 academic year.

Apprenticeship Fee: Contribution reduced by 33%.

Postgraduate Grant: Increased from €4,000 to €5,000.

Student Grants: Increased by 15%, with higher income thresholds for the special maintenance grant and postgraduate schemes (September 2025).

Housing:

Key Measures:

Help-to-Buy Scheme: Extended to the end of 2029.

Mortgage Interest Tax Credit: Extended for 2024, offering tax relief on increased mortgage interest, capped at €1,250.

Rent Tax Credit: Increased by €250, bringing it to €1,000 for individuals and €2,000 for couples (2024 and 2025).

Stamp Duty: Increased to 15% for bulk buyers of 10+ residential properties and a new 6% rate for homes over €1.5 million.

Vacant Homes Tax: Increased to 7 times the Local Property Tax base rate.

Social and Affordable Housing:

10,000 new social homes, 7,400 social housing leases, and 6,400 affordable/cost rental homes (2025).

Housing Assistance Payment (HAP): 8,400 new tenancies in 2025, with support for 50,000 existing tenancies.

Homeless Services: €303 million to support emergency accommodation and homelessness solutions, including Housing First.

Housing Regeneration:

Grants for adapting homes of older people and those with disabilities.

Retrofit Program: Retrofitting 2,500 social homes to a BER of B2.

Remediation: Addressing homes with structural defects and re-letting 2,300 void social housing units.

Energy and Environment:

Electricity Bill Support:

All domestic electricity customers will receive €250 off their bills in two instalments, with the first before the end of 2024 and the second in early 2025.

VAT Extension:

The reduced 9% VAT rate on gas and electricity is extended until 30 April 2025.

Health:

Key Measures:

335 new hospital beds, 160 community beds, 2 new surgical hubs.

Increase in GP and nurse training places and 49 new consultant posts.

Free Hormone Replacement Therapy (HRT) for menopause symptoms.

Expanded mental health services, including youth mental health, suicide prevention, and Traveller mental health initiatives.

Expanded free IVF access under HSE Assisted Human Reproduction services.

Services for Older People:

600,000 additional home support hours and increased nursing home places.

Disability Support:

70 additional residential places and new Autism Innovation Fund for local community groups.

Transport:

Key Projects:

Increased public transport capacity, new bus services, and extended cycling/walking infrastructure.

Major rail projects (DART+, Cork Commuter Rail) and road safety initiatives.

The continuation of public transport fare reductions, free transport for children aged 5-8, and a 50% discount for young adults (19-25).

Vehicle Incentives:

Lower VRT for electric commercial vehicles and support for Low Emission Vehicles.

Benefit-in-Kind (BIK) relief for electric company vehicles extended to €45,000.

Other Announcements:

Justice:

€3.9 billion allocation, including recruitment of 1,000 trainee Gardaí, expanded criminal legal aid, and new agencies like the Office of the Police Ombudsman.

Climate and International Aid:

Irish Aid increased to €810 million, with €35 million allocated to international climate finance, contributing to Ireland's 2025 climate finance target of €225 million.

The multi-billion euro budget, led by Minister Chambers, focuses on infrastructure, tax changes, and support for households & businesses. Below are the key highlights:

Tax Changes

Inheritance Tax: Capital Acquisition Tax thresholds to increase from €335,000 to €400,000. Group A threshold increasing from €335,000 to €400,000; Group B threshold increasing from €32,500 to €40,000 and Group C threshold increasing from €16,250 to €20,000.

Tax Credits: Personal, Employee, and Earned Income credits will increase by €125, and the tax threshold will rise by €2,000 to €44,000.

USC Changes: The Universal Social Charge (USC) will drop from 4% to 3%, and the income entry point will increase to €27,382. This aligns with a minimum wage increase and boosts workers’ pay.

Rent and Mortgage Relief

Help to Buy Scheme: Extended until 2029, providing more support to first-time homebuyers.

€1.25 Billion for the Land Development Agency (LDA): This will help develop more affordable housing and sustainable city projects, addressing Ireland’s housing crisis.

Renters: The rent tax credit will increase by €250, bringing it to €1,000 for singles and €2,000 for couples.

Mortgage Interest Relief A respite for homeowners, a 20% tax relief on the increased interest paid in 2022 as compared to 2023, has been announced. This is capped at €1,250 per property and is aimed at those affected by interest rate hikes.

Landlords: Extending the relief for pre-letting expenses for landlords. The relief will continue for three more years, until the end of 2027.

Increased stamp duty on Residential Properties: This will come into effect from tonight. The existing rate of 1% will continue to apply to values up to €1 million, and 2% on values above €1 million, with a third rate of 6% to apply to any value in excess of €1.5 million, with immediate effect. Normal transitional arrangements will apply for transactions in process.

Benefits for Employees and Businesses

Tax-Free Bonus:Employers can now give tax-free bonuses of up to €1,500, up from €1,000.
Benefit-in-Kind (BIK) regime for company cars: The temporary universal relief of €10,000 to the Original Market Value (OMV), which was first introduced in 2023, is being extended for a further year.

Business Support and Innovation

R&D Tax Credit: The first-year payment threshold rises from €50,000 to €75,000 to support small businesses.

Capital Gains Tax (CGT) Relief: Start-ups can now benefit from a lifetime limit increase from €3 million to €10 million, encouraging more investment in new ventures.

Employment Investment Incentive:Start-Up Relief for Entrepreneurs and the Start-Up Capital Incentive have been extended for a further two years to the end of 2026.

Social Welfare and Health Investments

Carer’s Allowance threshold raised to €625 for singles and €1,250 for couples.

Increases in maternity, paternity, and adoptive payments by €15.

A new “baby boost” payment for newborns, doubling child benefit payments in the first month.

When safeguarding your family’s future, one of the main options people consider is life insurance. But what if we told you that it is possible to save money on taxes while ensuring your family are financially secure? That’s where Pension Term Assurance comes in. A special type of life insurance that ensures you get much-needed coverage and tax savings.

Pension Term Assurance- What is it?

Pension Term Assurance is a unique type of life insurance specifically designed to protect your family if you pass away before you retire. It has an added benefit, tax relief, meaning you could save up to 40% on your life insurance costs. By combining financial security with tax savings, Pension Term Assurance is a fantastic option for many people, especially those who are self-employed or without an existing pension plan.

How Does It Work?

The two main types of Pension Term Assurance plans are Personal Pension and Executive Pension. Each is adapted to meet the specific needs of different individuals, but both share the common aim of providing financial protection with the added advantage of tax savings.

Pension Term Assurance – Personal Pension

The Personal Pension option is ideal for individuals who are self-employed or do not have a pension plan through their employer. This plan is designed to provide life cover up to the retirement age you select. Should you pass away during the policy term, your beneficiaries will receive a tax-free lump sum, ensuring they are financially protected in your absence.Thanks to the tax relief, this plan can significantly reduce your overall life insurance costs.

Pension Term Assurance – Executive Pension

The Executive Pension plan offers similar benefits but is specifically tailored for self-employed individuals or those who do not have access to a workplace pension scheme. This plan covers you until the standard retirement age set by your employer’s pension scheme, providing peace of mind that your family will be financially secure should the unexpected happen. While there may be some restrictions on the level of coverage, the tax-saving benefits make this an attractive option for many.

Why Choose Pension Term Assurance?

Pension Term Assurance is more than just life insurance. It’s a smart financial move that helps you protect your family while also making the most of available tax relief. Here’s why it could be the right choice for you:

Financial Security: Ensure your family’s financial future is secure with a tax-free lump sum payout.

Tax Savings: Benefit from significant tax relief, potentially reducing your life insurance costs by up to 40%.

Tailored Options: Choose between Personal Pension and Executive Pension plans to find the coverage that best suits your needs.

Flexibility: Select a retirement age that aligns with your financial goals and life plans.

Get Started Today

Navigating the world of life insurance and tax relief can be complicated, but you don’t have to do it alone. A Financial Planner can help you understand your options and find the Pension Term Assurance plan that best meets your needs. Whether you’re self-employed, without a pension plan, or simply looking to lower your life insurance costs, Pension Term Assurance offers a smart, tax-efficient way to secure your family’s future. Don’t leave your family’s financial security to chance. Explore Pension Term Assurance today and discover how you can protect your loved ones while enjoying the benefits of tax savings.

The Personal Retirement Savings Account (PRSA) is one of the most beneficial and tax effective retirement plans which allows you to retire more securely. If you are either nearing retirement or are still in the saving period, it is essential to understand how to utilise your PRSA to guarantee a secure future.

Access to PRSA Before Retirement:

One of the best aspects of a PRSA is that it allows you to access your retirement fund, years before you retire. You can cash in your PRSA any time after the age of 60 regardless of whether you are fully retired, or due to retire soon. This can be helpful if you plan on cutting back on work before formally retiring or if you need additional income to cover unexpected expenses. In cases of ill-health, you can access your PRSA at any age, which may help during tough times. In addition, those willing to retire early from employment can start accessing their PRSA from age 50. This ensures that your retirement account will always be there whenever needed.

PRSA Benefits in the Event of Death:

It is a great relief to know that if you die before you withdraw from the PRSA, the full value of your fund is passed on to your estate. This ensures that your beneficiaries, whether family or loved ones, receive the full benefit of your retirement savings, providing peace of mind that your hard-earned savings won’t go to waste The PRSA can also be integrated into the estate planning process to help secure financial stability for your heirs.

Retirement Benefit Options

Upon reaching retirement, the PRSA gives you several options for how you can use your savings. Firstly, you can take up to 25% of your PRSA fund as a tax-free lump sum, which can be an excellent way to cover any large expenses or enjoy a well-deserved treat after years of saving. After taking the tax-free lump sum, there are multiple options left for what you can do with the remaining amount:

Purchase an Annuity: An annuity guarantees a fixed income for life, which can provide peace of mind that you’ll never run out of money during retirement.

Transfer to an Approved Retirement Fund (ARF): An ARF offers flexibility, allowing you to draw down income as needed while keeping the balance invested.

Keep in a Vested PRSA: This option keeps your funds in the PRSA while offering income flexibility, similar to an ARF.

Withdraw the Remaining Balance: You can choose to withdraw the remaining balance as a taxable lump sum, though this may not always be tax-efficient, depending on your financial situation.

Selecting the right option will depend on your retirement goals, risk tolerance, and income needs. It may be beneficial to speak with a financial advisor to determine the best route for your circumstances.

Income Flexibility and Withdrawal Requirements

Both ARFs and vested PRSAs allow for flexible withdrawals, which means you have complete control over the amount of income you choose to take in retirement. Nonetheless, every ARF or vested PRSA holder must withdraw a minimum of 5% per annum once the holder reaches the age of 61. This guarantees a constant flow of income while complying with tax regulations. This 5% withdrawal can provide a consistent source of income and help with monthly bills as well as, general expenses, without rapidly depleting your savings.

Tax Efficiency

Another important advantage of the PRSA is its tax efficiency. Making a contribution to your PRSA attracts tax relief which means there is less income tax that you have to pay for the duration of your working life. There is also inbuilt tax relief in growing your PRSA, which protects your savings. At retirement, all withdrawals made after the tax-free lump sum are taxable. However, you can plan your withdrawals in a manner that minimises tax payments, especially if they are coordinated with other sources of income. To get the most out of your PRSA, it's important to plan carefully and think about your finances, retirement goals, and taxes. A PRSA gives you flexible ways to access your money and comes with tax benefits, making it a great way to secure your financial future in retirement. Working with a financial advisor can help you create a retirement plan that fits your needs and ensures you’re financially comfortable. By using all the benefits your PRSA offers, you can have more control over your retirement money and enjoy the peace of mind that comes with financial security.

Retirement at 50 is a dream come true for many people. The notion of escaping from day-to-day job commitments, having more leisure time for hobbies, travel and other exciting things in life is very attractive indeed. But does it really happen? The brief answer to this question is yes. However, there is more to retiring at 50 than just your age.

Age Is Not the Issue; Money Is

While thinking about retiring, some people may feel it is too far away, from an age perspective. As significant as it may be, age cannot be deemed as the main factor: money can! If one lacks enough funds, then retiring before 50 years old may only mean living under constant financial pressure where one can hardly enjoy his/her own freedom.

Planning Is Everything

If you are serious about making retirement at fifty an achievable goal, then start planning now. This implies more than just having an ideal age set; rather you should calculate how much money would suffice for you to live comfortably after working for so long.

Take this into account

How Much Do You Need To Match Your Lifestyle Costs? What are the costs associated with maintaining your current lifestyle? Are you planning to travel extensively, buy another home or take up any expensive hobbies? These charges must be included when working out how much you need in savings upon your retirement.
Healthcare: Healthcare expenses increase once an individual gets older. Health insurance paid privately until reaching an eligible age for state coverage will also have to be considered if someone takes early retirement.
Inflation: Over time, the value of money goes down due to inflationary pressures. However, over a period of 20 years, one euro will not have the same buying power as today. Make sure that your retirement savings are placed where they can grow and therefore outpace inflation.
Longevity: Modern medicine has increased the average life expectancy of people. You need to be sure that you have enough savings to cover your entire retirement period.

Start Planning Early

The earlier you begin saving and preparing for your retirement, the more likely you are to achieve financial security upon reaching 50. The following guidelines may assist you:

Maximise Your Contributions: Utilise retirement accounts as well as pension schemes that provide tax relief. If there is an employee contribution match offered by your employer, ensure that you make adequate contributions towards it.
Invest Wisely: Have a diversified investment portfolio, which encompasses risk and reward potential in a variety of areas such as stocks, bonds, real estate or other investment types so as to build up savings over an extended period time.
Consult a Financial Advisor: Get professional advice to help in creating a retirement plan tailored specifically to meet your individual needs. At askpaul we can help you estimate future expenses, optimise your investment approach and confirm if your retirement goals will be met without any doubts.

If retiring at 50 is what you want to aim for then having a proper plan is crucial. Receiving guidance from a finance expert or pension specialist may equip you with tips on how to turn this dream into reality. Retiring at 50 is possible, but it takes careful planning, disciplined saving, and a clear understanding of your financial needs. Don’t forget that it’s not just about what age you retire at, but rather if you have the means to support yourself after work. Start early, plan intelligently and seek help from the experts for the happiest retirement years.

Pension plans were probably the last thing on your mind when you were in your twenties. As you changed jobs or moved abroad, it is likely that you paid little attention to the pension contributions that you left behind. In today’s job market, lifetime pensions are fast becoming obsolete. Job hopping is increasingly common so it’s unsurprising that many people have no idea about the different pension plans they’ve accumulated throughout their career. According to Glenn Gaughran, Head of Business Development at Independent Trustee Company (citing OECD research), only 35% of employees in Ireland had stayed in the same job for 10 years or more by 2022. This trend illustrates how often people change jobs and the difficulties associated with managing multiple pension pots. The outcome? Many people don’t know about the sizable pension savings they have made. Tracking down these pensions can be challenging if you’ve switched jobs a number of times, changed your surname after marriage, or relocated without telling your former employers where you were going. Pensions are often tied to work email addresses, which become inaccessible once you leave a job. In fact, there is approximately €500 million worth of unclaimed retirement benefits in Ireland alone. However, failing to address these dormant pensions could result in missing out on a significant sum of money. Finding a lost pension can be time-consuming and frustrating; however, following these five steps could mean all the difference between being cash-strapped during retirement and living comfortably.

Find Old Documents

If when leaving employment and you’re still entitled to future pension benefits then you become what is referred to as “a deferred member.” Nonetheless if the trustees running the pension scheme do not have your current contact information, they will be unable to send you updates on your benefits or the pension fund’s performances. You need to find their details for yourself. If you’ve kept all your paperwork from previous employers, you might find clues to your old pensions in a kitchen drawer or a box in the attic. Look for old benefit statements, payslips, contracts of employment or emails that mention the name of a former pension provider. The most common reason why people lose touch with their occupational pensions is lost paperwork. With technology these days, many pension providers now have online portals or apps where you can easily find information about your pension schemes.

Get in Touch with Your Previous Pension Provider

In the case that you can identify who owns your pension scheme you may be able to reach out to them and inquire if they still administer the policy. To trace your missing plan, they may ask for some details like date of birth, current address as well as Personal Public Service (PPS) number. For example, if a merger took place and your pension was transferred to another provider, the original supplier should be able to direct you to the new firm. If your benefits were moved too, you are entitled to a “preserved benefit” which is a retirement savings that can be claimed at normal retiring age as long as you contributed for at least two years. For pensions abroad, the Irish equivalent of the PPS number is required such as the national insurance number in UK while past addresses and employers will also enable location of such pensions.

Lookup Your Employer

In case you do not have any documentation regarding pension plans you can send an inquiry email to your previous employer’s HR Department who may then guide you on how you could get touch with the scheme and offer details like policy number. In instances where the employers went out of business, contact colleagues who had been there earlier for information about what became of the scheme or who was its provider; otherwise try LinkedIn. Just knowing chairman names can be useful for tracing old schemes. The companies registration office may give some other leads.

Report To Pensions Authority

If all your efforts seem fruitless it may be necessary to approach the Pensions Authority which is responsible for regulating occupational pensions in Ireland. Trustees are obligated by law to register all pension schemes with this body and must make reasonable attempts to locate members. If the company ever liquidates, then it would mean that these schemes should wind up and members will then be transferred into Personal Retirement Bonds (PRBs) unless advised otherwise by them.

Consult A Financial Advisor

A qualified financial advisor can help you find a lost pension plan. They can help simplify complex processes including contacting providers on your behalf where signed letters of authority grant access rights. International pensions might necessitate employing an overseas specialist in pensions since your old pension may be somewhere outside the country. Such professionals go through different records of finance or databases in order to find your name.

What Next: Managing your discovered pension funds

Now that you have located all the old pension pots, depending on your age, financial position and retirement goals, there are various options available. An independent financial advisor is best positioned to guide you in making a decision. For many people it makes sense to move their pensions into one scheme as it will be easier to administer investments and access benefits when they retire. Moreover, you pay less fees this way since having multiple pensions often means multiple fees. Alternatively, leave your pension where it is and start drawing down at the normal retirement age for your scheme. Even though contributions stopped when you left the job, any defined contribution pension you had would still have been invested and should benefit from compound interest over time. If you want all pensions in one place then it may be possible to transfer them into a current employer’s pension scheme if this allowed. On the other hand transferring such funds into a PRB or a Personal Retirement Savings Account (PRSA) allows you to take charge of investment decisions directly. Prior to any decision making, it is essential to think about the long-term effects. For instance, accessing your pension funds before retirement could restrict their potential for growth. However, in certain instances, early withdrawal of part of your pension may be useful particularly when you are financially challenged or planning some life events. In short, it is quite important to track and control our lost pensions; thus having a great financial future where you can enjoy a peaceful retirement. Book a FREE no-obligation Pension Consultation today

Employer contributions to Personal Retirement Savings Accounts (PRSAs) in Ireland are a big topic of discussion, especially as to whether these contributions should be taxed as a Benefit-in-Kind (BIK). Employers’ contributions to PRSAs at present do not constitute taxable income for their employees since this measure was designed to encourage people to save for retirement. However, this tax break has raised questions about fairness and economic implications.

What Are PRSAs and BIK?

PRSAs were created to offer a more flexible way of saving for retirement, particularly for those without occupational pension schemes. Both employees and employers can put money into these accounts which are eligible for tax relief, making them attractive options. Benefit-in-Kind (BIK) refers to benefits or perks that come with your job and are part of your taxable income. These could be things such as company car(s), health insurance etc. Normally such benefits are taxed but employer’s contribution into the PRSA is non-taxable at the moment.

Why Some Support the BIK Exemption

Encourages Saving: The main aim of exempting from Benefit In Kind is to encourage both employers and employees to contribute towards their retirement savings. This policy is aimed at increasing savings since many people do not save enough for their retirement years. Financial Security: By encouraging more retirement savings, the government hopes to reduce future reliance on state pensions and welfare. Administrative Ease: Not having to account for Benefit In Kind on PRSA contributions makes things simpler for employers, potentially encouraging more firms to provide this benefit.

Why Others Oppose the BIK Exemption

Tax Fairness: Critics argue that all other employment related benefits should be treated uniformly under taxation purposes. But why aren’t other non-cash benefits like PRSA contributions taxed? Lost Revenue: Government loses revenue through the tax break, therefore the money could be used to provide healthcare and education among other public services. Income Inequality: Low-income workers get little benefit as compared to their higher-income counterparts who may obtain considerable refunds from employers.

What Should You Do Now?

There may be an opportunity in which you can take advantage of current regulations before this year’s budget scheduled for October 2024. If you are thinking of increasing your PRSA contributions or have an employer that makes such contributions now might be the right time to do it. This is because any future changes can affect the current tax advantages so it is wise that one maximises his/her contributions under the present rules. Stay informed, plan ahead and talk to us today about your retirement savings strategies to ensure you exploit all available tax benefits, before any changes occur.

Ireland’s retirement savings landscape is about to experience a big change with the arrival of auto-enrolment legislation. This new arrangement, which is targeted to be implemented in 2024, seeks to enhance pension coverage among all workers, especially those who are currently not part of an occupational pension plan. Here’s what you need to know about auto-enrolment and why it might be better for you to opt for a traditional pension scheme before this takes effect.

What is Auto-Enrolment?

Auto-enrolment is a government initiative that aims to enrol employees automatically into a pension scheme. Below are the key points:

Auto-Enrolment: Employers will sign up their qualifying members of staff automatically for a pension plan.
Opt-Out Option: Although employees may decide not to join, they will be enrolled by default thus encouraging more people to save towards their retirement.
Employer Contributions: As part of their contributions towards the pension fund, employers will match an employee’s input into the fund at a certain percentage.
Government Contributions: The government can also make top-up contributions in addition to employer’s and employee’s contributions to boost savings.

Why Auto-Enrolment?

Enlarged Pension Coverage: More than half of Irish employees have inadequate retirement saving schemes. In order for workers’ savings to be enhanced, auto-enrolment was introduced.
Encourage Long-Term Savings: At its core, making it easier for people to start saving is one way of doing this by having automatic enrolment as an ‘opt-out’ model, meaning more people would contribute towards their retirement funds at reasonable levels.
Financial Security: It will reduce future financial pressures on the state by securing personal retirement savings amidst aging population growths.

The Pros and Cons of Auto-Enrolment

Advantages:

Saving Simplicity: Employees don’t need to take any action to save for retirement, making the process straightforward and effortless.
Increased Savings: Automatic pay deductions ensure recurring contributions thus boosting a large retirement fund over time.
Employer and Government Support: Extra savings can come from employers as well as the government.

Disadvantages:

Reduction in Disposable Income: Some part of the employee salary will go into his or her pension fund meaning that he or she will have less money for personal use.
Employer Costs: This could be particularly difficult for small businesses when they need to start making compulsory payments towards the scheme.
Possible Opt-out Rates: However, some workers may opt out if they cannot afford the cost of the contribution.

Why Establish a Traditional Pension Scheme Now?

Control and Customisation: A traditional pension scheme, if set up now, allows employers to tailor it towards their needs and those of their staff members making it more attractive with better terms of service possible. This Customisation includes investment control and future transfers of pensions. In addition, this is an expression that workers’ needs and wants are being addressed in a good manner by their employers therefore securing staff loyalty among other things for both current and future employees. Avoid Compliance Rushes: Sometimes there is the likelihood of a compliance rush with new regulations when auto-enrolment becomes mandatory. Setting up a pension scheme now, guarantees smooth transition aside from avoiding unnecessary administrative problems upon full implementation of the law. Employee Attraction and Retention: Creating a traditional pension now could improve your benefit package thus improving its attractiveness on the employment market. By so doing, business owners show commitment toward lifetime financial stability for their workers. Financial Planning: This planning helps in ensuring that budgeting takes place progressively before an organisation is hit abruptly by sudden unplanned employer’s costs. It also indicates that organisations are able to adjust themselves financially before implementing this policy change regarding pensions provisions. Ireland’s auto-enrolment legislation is poised to significantly improve retirement savings for many workers, but it also brings new responsibilities for employers. We believe it is advantageous to set up a traditional pension scheme before auto-enrolment is required because this offers control, simplicity in compliance and improved employee benefits.

Conclusion

Businesses must take action now that the new regulations are projected to become effective within the next year. Companies can do this by putting up a retirement scheme before the time, thus positioning it well for any upcoming changes and having attractive pensions for its workers. A consultation with askpaul may help determine which route is appropriate in establishing a conventional pension plan that suits your objectives as well as helping your staff guarantee financial stability in retirement.

Summary of the Consumer Research Report

Retirement is a major life stage, and during this period financial ease significantly affects the quality of life. A survey conducted by the Central Bank of Ireland reveals varied levels of confidence individuals have regarding their preparedness to retire in line with our askpaul 2nd National Pension Survey

Disconnect Between Retirement Goals and Pension Projections

Firstly, it was found that 54% of Irish people who were surveyed as part of a consumer research report conducted by the Central Bank are concerned about what their pension fund will be valued at when they retire and their retirement income aspirations vary significantly from the projected pension figures. This indicated the overwhelming lack of understanding regarding money matters after retiring. As many as 79% of respondents from the askpaul 2nd National Pension survey declared that they did not know how much money would be sufficient for them to live comfortably after they had stopped working and retired. This knowledge gap can lead to significant financial stress and anxiety in later years potentially resulting in inadequate savings or continued reliance on the state pension which 98% of respondents from askpaul’s 2nd National Pension survey called insufficient for retired life.

Did you know?

The askpaul survey revealed that 56% of respondents have less than €100,000 saved, compared to the average amount of retirement savings in Ireland in 2024 of €111,000.

Passive & Uncertain About Retirement Income Needs

55% of Central Bank respondents said they were passive or disengaged on issues related to pensions and do not know what their future incomes will be during retirement. This is significantly lower than the askpaul 2nd National Pension Survey of 68% who reported not tracking how their retirement funds are invested, which could put their financial future at risk. The research shows that most people don't prioritise retirement and pension planning. Many lack knowledge on this matter and do not actively plan for their retirement, despite having positive ideas about it that are unclearly defined in their mindsets. Therefore, many people feel unsure about their financial well-being after they retire.

Complexity of Pensions Leads to Uncertainty

Pensions can be seen as complex financial products leading to challenges in understanding pension concepts. The Consumer Research Report by the Central Bank of Ireland shows variations in the levels of knowledge on pensions and retirement planning with uncertainty or lack information expressed by 61%. This is significantly higher than the 44% of the askpaul followers & subscribers who expressed uncertainty about understanding the available retirement saving options. For everyone, the way towards achieving financial security during old age is different from one person to another. Although many are hopeful, it’s important we become more engaged in our own futures financially if we want a good quality of life when we retire. A secure and enjoyable retirement can be achieved through focusing on both immediate needs and long-term goals. askpaul simplifies the pension process by providing practical advice that anyone can follow, helping them secure their financial future. Book a free no-obligation pension consultation today Source* Consumer Research Report Pension and retirement income Key challenges for consumers-Central bank of Ireland July 2024

Are you among the many people who have their money sitting in the bank, earning little to no interest, while inflation eats away at it? You’re not alone. Many individuals face this problem of not being able to see their savings grow. In this blog post, we will explore smarter alternatives for your money instead of just letting it sit in your deposit savings account. Imagine having €100,000 in your bank account with no interest being earned. If annually inflation is at, say, 3% then you are potentially losing up to €3,000 because nothing is happening to your money. Then what can be done to make sure that your money works better to help beat inflation? The best answer here is investing. However, before starting off on investing you must consider some essentials. First and foremost, make sure that you keep some money aside for emergencies such as unforeseen expenses or even losing a job. Your emergency fund should be able to cater for at least three months’ worth of living costs. Next think about what you want your money to do over the next five years. Do you have something expensive coming up? like a wedding or buying a home? Make sure to have enough cash set aside in an easily accessible bank account, so that when required it can be quickly withdrawn. Now let’s discuss the money that you don’t need immediately, especially anything more than five years ahead of us. This is where investing comes into play and by doing such, one has the opportunity of growing his or her investment and potentially making higher returns, than if it was left sitting dormant at the bank. There are several types of investments such as stocks, bonds and real estate. Every type comes with different levels of risk and reward- always bear this fact in mind when thinking about the amount of risk which feels comfortable with your goals. If you're new to investing and not sure where to start, it is important to talk to a financial advisor. Here at askpaul, we will come up with a personalised plan and advice that suits your particular circumstances, taking into account the level of risk you’re comfortable with while giving you advice and guidance along the way. So if the money sitting in your bank account feels like it’s not doing anything, maybe it’s time to think about investing. Through smart money choices, you can make your funds go further and achieve your long-term financial goals. For more assistance on investing, please do not hesitate to contact us. We are here to help you maximise what you have and develop a secure financial future.

Saving & Investing compared

Saving

Investing

Quick access to cash

A savings or deposit account offers quick access to your money as and when you need it. However, some accounts may have limitations on the amount, frequency, or notice required for withdrawals.

Typically used for long-term objectives

Investing is ideal for achieving medium to long-term goals like funding a child's education or preparing for retirement. You may access your funds during the investment period however you are potentially subject to charges and penalties depending on the fund.

Minimal risk involved

Your money in a savings account are safeguarded under the deposit guarantee scheme, albeit subject to certain limits.

Delayed access to invested funds

Investing may tie up your money for a specific duration or require additional time to access compared to a savings account.

Earns interest

Saving money in a deposit account allows you to earn interest, although the returns may be lower compared to investment options.

Always carries risk

Investing involves risk, with no guarantee of returns, and there's a possibility of losing some or all of your invested funds.

Low potential returns Presently, interest rates are quite low, and even over extended fixed rate periods, returns from deposits are typically lower than other investment avenues.

Potential for higher earnings

Investments offer the potential for higher returns than savings accounts, providing an opportunity to grow your wealth over time.

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