Personal Pension in Ireland

A personal pension is an individually owned retirement fund, registered under your name. Unlike a corporate/ workplace pension scheme where your employer might contribute to your pension, with a personal pension, only you have the ability to make contributions. 

Personal Pension Plans (PPPs) are typically offered by insurance companies and can be acquired via MyPension. With numerous PPP options available, selecting the most suitable one can pose a challenge. Our Advisors are always happy to help determine a pension to help you achieve your retirement goals.

When you select a fund and make a contribution, the insurance company will allocate your funds into one or multiple investment vehicles, that they believe will yield optimal returns throughout the duration of the PPP. Some assets an insurance company might invest in on your behalf are shares in diverse companies, government bonds, and investing in real estate.

The insurance company will then deduct various charges from your contributions. These charges may include setup fees, allocation rates, bid/offer charges, fund management fees, fund switching fees, etc. Many of these charges are deducted from your fund and can impact the value of your pension. These charges will be clearly defined in the key features document, and your Financial Advisor can help you to calculate charges so you can understand the return to expect based on annual yield assumptions. 

 PPPs can be taken out by:

• Someone who is self-employed
• Employees who don’t have access to an occupational pension scheme.

and;

• Have a taxable income for the relevant tax year. 

Upon retirement, if your Personal Pension Plan (PPP) has performed well, you’ll have accrued a lump sum in your PPP fund. This lump sum comprises your monthly contributions and any growth resulting from investing your funds in various vehicles, minus applicable charges. However, if the investments within your PPP do not yield any growth during its duration, you may end up with less money than you’ve contributed.

You can access the funds from your pension under the following circumstances:

1. Ages 60 to 75: You can withdraw funds from the age of 60 up to age 75. It’s not mandatory to retire or cease working to access the benefits from your PPP. You simply need to be over 60 and under 75.
2. Serious Ill Health: You can access your pension at any age in the case of serious illness, typically when you’re permanently unable to work again. This is subject to Revenue approval, and only available in exceptional circumstances.
3. Age 50 for Specific Occupations: If your occupation typically involves retirement before the age of 60, such as being a professional athlete like a golfer, rugby player, or jockey, you may access your pension from the age of 50.

When accessing benefits from your PPP fund, you’ll typically have the option to withdraw a tax-free lump sum of 25%, up to a maximum lifetime limit of €200,000. After this, you have several choices for the remainder of the balance, if any:

1. Approved Retirement Fund (ARF): You can choose to invest the remaining balance in an Approved Retirement Fund (ARF), allowing the balance of your fund to have the potential to grow tax free, while accessing your pension.
2. Annuity: Alternatively, you may opt to purchase an annuity, which provides a regular income stream for life or a specified period
3. Taxable Lump Sum: Another option is to take the remaining balance as a taxable lump sum, subject to taxation according to applicable laws and regulations.