Tanner’s Tips – Pensions

Tanner’s Tips comprises of a father and daughter team, an unstoppable duo fighting apathy in the world of finance.
Tanner's Tips pensions
You are never too young to start a pension.   Planning for the future is always a good investment.

Pensions are also a great way of making the most of tax relief.   If you are under 30, you can contribute up to 15% of your annual salary to a pension fund, and get tax relief on this.   So, for example, if you have net relevant earnings* of €20,000 p.a., you can contribute up to €3,000 to a pension fund each year, while it would only cost you a net of €2,400**.   As you get older, you can contribute a greater percentage of your salary while still getting full tax relief on these contributions***.

For anyone interested in investments, you know that to achieve any significant return, you must take a certain level of risk.   I am sure many of you would be interested if I told you that you could invest €2,400 a year as a standard rate tax payer, with a return of €600 without any risk.   That is a 25% return, risk free.   This of course increases if you are a higher rate tax payer (40%) to a 66% return, risk free.   That is an immediate risk free return of €1,200 on a contribution of €1,800.   Bearing in mind that the maximum deposit rates as I type this, are 0.5% for twelve months, these are  very attractive returns indeed.

Tax relief is a huge advantage that many people are in the dark about.   Something so readily available to us should be made use of.   We do offer advice on pensions, and can arrange pensions with a number of different life companies.   If you would like to drop in to discuss your options, we would be delighted to assist you.

* Maximum net relevant earnings is €115,000 p.a.
**Income tax relief is calculated at your marginal tax bracket(in this example 20%).
***under 30     – 15%
30 – 39        – 20%
40 – 49        – 25%
50 – 54        – 30%
55 – 59        – 35%
60 +             – 40%
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