What is a pension?

A pension can refer to payments you receive in retirement from the government or a personal pension pot, as well as the schemes you save into in preparation for retirement. There are different types of pension: state pensions that provide regular payments from the government, workplace pensions set up by employers, and personal pensions that are self-funded. When you pay into a pension, contributions are invested into a pension fund, which may consist of assets including stocks, bonds, and property.

Retirement planning is the strategic process of preparing your finances for the future. Planning your finances is a major part of this journey and will dictate when you can retire, how long your pension will last, and the type of lifestyle you can have after you stop working. 

In Ireland, it may not be possible to rely solely on the State Pension to provide the income needed for retirement. By planning effectively for your retirement, you can supplement your State Pension and bridge the gap, giving you greater financial independence. You may wish to discuss your personal situation with an independent financial advisor to ensure your pension will support your goals for later life. 

Looking into your options early will give you more control over your timeline. Creating a clear strategy is the first step, taking into account factors such as tax relief, maximum pension contributions and the different ways you can save.

Explore resources to help you save and plan for your retirement with purpose.

In Ireland, you will be automatically enrolled into the state-run workplace pension scheme when you meet certain age and income criteria. Alternatively, you may have access to an occupational pension scheme, which varies depending on your employer. You can also choose to save into a personal pension. The state pension provides a basic weekly income, and you can currently start receiving it from the age of 66. 

Explore different pension types and find out the key facts about them.

Types of pensions:

1. State pensions. The maximum weekly rate for the contributory state pension is €299.30 for people under 80, or €309.30 for those aged 80 or over. It’s available from the age of 66. 

2. Widow’s pensions. Officially known as the Bereaved Partner's Pension, this is a weekly payment designed to support people in Ireland if their spouse, civil partner, or qualified cohabitant passes away. 

3. Public service pensions. Public servants are eligible for specific retirement plans from the government, which are calculated based on factors like salary and service length. 

4. Teachers’ pensions. A teacher’s pension is a benefit provided by the government. The amount a teacher receives is based on years of service and when they started teaching among other factors.

5. Supplementary pensions. Some public service pension schemes offer supplementary pensions to retirees, helping to increase total benefits. 

6. Private pensions. Individuals can save into private pensions in Ireland, such as PRSAs and RACs. These are popular with people who are self-employed. 

7. Occupational pensions. In addition to the State Pension, employed individuals can save into an occupational pension. These include contributions from employees and employers.

When you pay into a pension, this is called a pension contribution. Your contributions may also be matched by employer contributions. Find out how to optimise pension contributions and understand key limits so you can save into your pension with confidence.

This will depend on the type of pension you have and how much you have saved into private pots. The Irish State Pension is designed to provide you with a regular, ongoing income for as long as you live.

For workplace and private pensions, the duration of your income depends on how you choose to access your funds at retirement, and how much you saved into the scheme. If you decide to purchase an annuity with your savings, you receive a set income for a certain period, usually your lifetime.

Alternatively, if you transfer your retirement savings into an Approved Retirement Fund, your money remains invested. In this scenario, your income will only last as long as your fund maintains a balance, which depends on investment performance and your chosen withdrawal rate.

For employees, a workplace pension offers a highly effective way to build long-term financial security. One of the most significant advantages is the tax relief you receive on your contributions, which lowers the true cost of saving for your future.

You also benefit directly from your employer's contributions, which add valuable extra funds to your retirement pot. Over the years, these combined contributions benefit from compound growth, and the effects can be significant. 

For employers, offering a competitive occupational pension scheme is a powerful tool for attracting and retaining skilled staff. It demonstrates a clear commitment to employee well-being and can also provide the company with corporation tax deductions on the contributions made to staff.