Retiring is an exciting time, but it can also be a stressful one if you’re not prepared. Fortunately, there are ways to save for your retirement now that can relieve some of this stress and help you live comfortably in the future. One way of doing this is by contributing to a pension scheme with your employer. If you’re new to pensions or just want a refresher on how they work, we’ve created this step-by-step guide for employees and employers alike that will help make sure you save enough money over the course of your working life so you’ll be able to enjoy all those retirement activities.

What is a pension?

A pension is a long-term savings plan that allows you to save money for your retirement. You can contribute to a pension plan before or after you start working, if you are self-employed, and if you are unemployed.

The main types of pensions available in Ireland include:

• Defined contribution schemes: These provide a set amount each month based on how much has been contributed and how well the investments perform over time. The benefit depends on how much is paid in and what happens with the investment funds during their lifetime (i.e., whether they grow rapidly or slowly).
• Defined benefit schemes (DB): This provides an income for life based on pay rates at retirement age; these may also include other benefits such as inflation protection or early retirement options depending on how much was invested into them during their lifetime (i.e., whether they grew rapidly or slowly).

How do I contribute to a pension scheme?

The employer deducts the contribution directly from your salary. The employer pays the contributions to the pension provider. You can check your pension contributions on your payslip.

What are the benefits of contributing to a pension scheme?

The benefits of contributing to a pension scheme are many. The most obvious is that you will have more money in retirement than if you do not contribute, but there are other reasons why it makes sense for employees and employers alike.

• Employers can save on taxes: The employer contribution is treated as an expense against profits in the accounting period where it occurs, which means that employers can reduce their taxable profit by making pension contributions on behalf of employees. This can result in significant savings on their tax bill — up to 40% if they’re eligible for full relief under Section 295(1)(b) TCA97 — but only if they make sure that their total contributions don’t exceed 50% of gross pay (or 30% if they don’t qualify for full relief).
• Employees get access to valuable benefits: For example, some pension schemes include life cover (which pays out if the employee dies prematurely) or critical illness protection (which pays out when someone becomes ill). These benefits may be linked directly into your account so that any money put aside goes towards them automatically; otherwise you’ll need to ask your provider about how much extra it would cost before deciding whether or not this feature is worth paying extra fees per month/year so that they could be included as part of any contract agreement between yourself and them.”

How much should I contribute to my pension scheme?

You can contribute up to a certain percentage of your income. The exact amount depends on the type of scheme you are in, but it will normally be between 5% and 15%. However, if you’re earning over £160,000 (or €190,000), then this limit drops to 2%.

If you want to make sure that you’re contributing enough money into your pension scheme so that the maximum tax relief is given by the government, it’s important to understand how much can be put into a pension scheme before any tax relief is applied. In general terms:

How does tax affect my contributions to a pension scheme?

You may be wondering how tax affects your pension contributions.

In Ireland, pension contributions are not subject to PRSI (Pay Related Social Insurance) and are therefore tax exempt. This means that you can contribute to a pension scheme without paying any additional taxes on them, even if you’re on the standard rate of income tax.

You also get a tax relief for contributing to your company’s scheme if:

• Your gross income is below €30,000 per year (or €40,000 for couples)
• You’re aged 18 or over

When will I start receiving a pension from this scheme?

You are a member of a pension scheme. The provider of the scheme is responsible for paying you your pension, and sets out its terms in the agreement with you. Your employer will also have signed an agreement with this provider to cover their contribution to your pension fund.

A number of factors affect when you will start receiving payments from your scheme, including:

• Age – You may be able to access some or all of your retirement savings before reaching 65 years old if they’re held in an occupational defined contribution scheme or personalised retirement account (PRSA). However, this may not be possible if you have other pensions taken out by previous employers that were based on final salary or career average salaries – these types of benefits tend not to allow early access unless there’s a serious illness involved;
• Length of membership – Some schemes require members who want access before retirement age (65), such as those who have worked less than five years with their current employer, while others don’t require any minimum period at all;

You can take steps now to ensure you have money for your retirement.

You can take steps now to ensure you have money for your retirement.

You may be thinking: “How do I even start?” Here are some tips and advice on how to get started with pension Ireland.

Conclusion

We hope this guide has helped you understand how pensions work and how to get started with your own. Remember that there are many different types of pension scheme out there, so it’s important for you to do your research before making any decisions about which one is right for you.