1. Death in Service benefit

Death is Service is a benefit provided to the employee by the employer that provides or pays out a tax-free lump sum (generally a multiple of the annual salary) to the surviving family in the event of death. The employee must be employed (i.e. on the payroll) at the time of death to qualify for this benefit. While this is not to be viewed as a replacement for personal life insurance, it is an added benefit for the employee and it comes at no cost to them. 

 

2. Income Protection Cover

Income Protection, also referred to as Income Continuance or Permanent Health Insurance is a benefit that provides a replacement income should an employee become unable to work due to illness, injury or disability. Income Protection payments generally commence after an initial deferred period (typically 26 weeks) during which time the employee could be in receipt of sick pay, depending on their terms of employment. The payment is treated as income for tax purposes and is capped at 75% of salary less the State benefit. An employee can be in receipt of this payment until they are deemed well enough to return to work.

The main causes that trigger an employee to claim on their Income Protection are attributable to mental health, orthopaedic, cancer and cardiac related problems which, unfortunately, are all too common in the world we live in. 

This can be seen as a real tangible benefit by the employee who, without such cover, could run the risk of having to survive on the €208 per week provided in the State disability benefit.

 

3. Pension

As we discuss in our pension article, contributing to a pension is the most tax efficient means of saving available to anybody. Not only that but having a good employee benefits package that includes a pension is highly sought after. Providing an occupational pension scheme is also tax efficient to the company as employee pension contributions receive tax relief against corporation tax. Company owners and directors can also benefit from having such an arrangement in place.

Including a pension and making employer contributions as part of your employee’s package helps to develop loyalty. It shows your commitment to your employee by making an investment in their future and it underlines your vision for them being part of your team for the long term.

If you’re not an employer, you can switch the perspective of this article and ask yourself “do I have any of these benefits?”. You might have and you’re not aware of them. A quick check with your HR contact or your manager should give you the answer. If not, it could be something that you can negotiate with your employer as part of your review.

If you’re reading this and wondering what the next steps are, we’re here to help and it’s what we specialise in. Why not give us a call or pop over an email and we can start the conversation.

 

1. It’s an investment in your future self

While this might seem obvious, failure to make this investment could result in having to make very drastic lifestyle changes come retirement age. Funding a pension allows you to maintain the type of lifestyle you become accustomed to living during your working years.

2. Nobody else cares more about your retirement than you. All the Government will do is keep you off the breadline.

That is a fact. Once you reach the age in which you’re entitled to the State Pension (once you made your full PRSI contributions) you’re looking at a receiving a figure of circa €14,000 a year. Funding your pension will ensure you have an income above and beyond this amount.

 

3. There is simply no other investment vehicle that can match the tax relief &

4. There are three tax benefits: your contributions, fund growth and tax-free lump sum

Let’s discuss both these together and they’re probably the most significant reasons to fund a pension, and which make them hard to ignore. If you pay tax at the higher rate, for every €100 you invest into your pension, the cost to you is only €60. Furthermore, your investment grows tax-free. And finally, once you draw your pension, you can avail of a tax-free lump sum. Food for thought for sure!

5. There’s no point in making plans to travel or live well after 65 unless you can afford it.

In many ways it goes back to the first reason about investing in your future self. Whether it be to travel more or take up a new hobby, the reality is you need to have money to pay for these things. Putting the money aside now, for your future, will help you achieve your retirement goals.

6. If you don’t do it yourself, you’ll be forced to from 2024 anyway.

This refers to Auto Enrolment which received government approval in October. Auto Enrolment will see contributions automatically made into a pension from your pay which will be added to (to a certain amount) by your employer and the State. However, for many, this simply won’t be enough.

7. Planning now means as the time draws nearer you can enhance as expenses free up

Many of us will have considerable expenses such as mortgage repayments or school fees to name just a few. As we get closer to retirement some of these expenses may no longer exist or have reduced.  Taking the steps of funding a pension will have created the base for increasing your contributions once your expenses have lessened.

8. There is plenty of great advice out there and resources to help

Again, this is a really good point. Going it alone might seem extremely daunting but the reality is that you don’t have to. A good adviser can take your hand and provide comfort in the knowledge that your future is secure.

9. You can expect to live nearly as long in retirement as you did in work

That can’t be true – can it? Surprisingly enough it is. Life expectancy is now greater than ever so based on averages we’re in for a longer retirement and that needs to be considered.

10. You get to start dreaming about your post-work life and how you want to live. Your pension is simply the tool to make it come true

Not unlike points 1 and 5 this really highlights that adequately funding a pension gives you the peace of mind that you can enjoy your retirement while being financially secure. We know the earlier you start, the better but at the same token, it’s never too late either and it’s certainly not worth ignoring. 

Why not contact us and we can assess your circumstances whilst providing you with the necessary steps to ensure your path to retirement is a smooth one.

What are the costs of Education?

One of Ireland’s leading life insurance companies produces an annual report on the average costs of education. This year, the report tells us that the average annual cost for primary school per child is just under €1,600. For secondary school, a pupil’s average annual cost is just over €2,800.  In the case of third level costs though, this average annual cost jumps to over €7,600 for a student living at home and up to €15,327 for a student is living in rented accommodation. This means a staggering €61,000* would be needed to fund just one child’s third level costs over a four-year period. 

When considering what we have learned above, it makes sense to plan early and adopt effective measures such as putting a savings plan into place. As is the case with most future planning, the earlier you start, the easier it is to reach your goals. In general, the most effective way to accumulate funds in the medium term is via regular monthly contributions into a savings plan.

For example, if you were to start saving €250 a month from the day your first child is born and provided you continue to save every month, when your child reaches their eighteenth birthday you will have saved €54,000. This figure is achieved without any growth from interest or investment return. If you apply a conservative net growth rate of 2% per annum, that same figure becomes €64,931. This is illustrated in the graph below:

 

Despite the increasing interest rate environment that we are currently experiencing, you might be hard pushed to find a high street bank offering an interest rate of 2% especially when you deduct DIRT which is currently 33%. There are alternatives to the traditional bank savings accounts though and these come in the form of life assurance saving plans.

Choosing the Right Plan

Most Life Assurance companies offer regular savings plans that give savers access to a wide range of investment funds that align to their investment risk profile. Most plans will allow for the addition of a lump sum or increases in the contribution. It is recommended that plans of this nature are reviewed regularly to make sure that you are on the right track towards your target.

As with most financial decisions, having a fundamental plan is massively important when it comes to saving. As part of this plan, you should consider your goals, affordability, suitability and having access to sound advice. As financial advisors we can remove some of the stress involved in putting a plan in place and making the right decision. With that in mind, please feel free to get in contact should you wish to discuss this area in more detail.

Warning: The value of your investment may go down as well as up.

Warning: If you invest in this product you may lose some or all of the money you invest.

 

* Source: Zurich - The Cost of Education in Ireland 2022