State pension

At present if you were to live on the state contributory pension, for example, you would get €230.30 a week up to the age of 80 and €240.30 , if you are over 80.


Personal Pensions/RACs (Retirement Annuity Contract)

A Retirement Annuity Contract "RAC" is the formal name for what is normally called a personal pension plan.

A personal pension plan is a private pension policy that is managed for you by a life assurance company or investment firm. Anyone who earns an income but who can't join an employer plan or who is self-employed can start up one of these plans.

You have to set up this type of plan yourself, arrange to pay your own contributions and claim tax relief yourself each year. If you are employed, your employer cannot usually make contributions to your personal pension plan.


PRSA (Personal Retirement Savings Account)

A PRSA is a new type of personal pension contract introduced in 2003. It is a contract between an individual and an authorised PRSA provider. It is a defined contribution plan.

You can use a PRSA to save for your retirement whether you are self-employed, employed or unwaged. If you are employed, your employer can also contribute to your PRSA.


Occupational pensions

A company/occupational pension plan is one that is set up by an employer to provide pension and other benefits for employees. The main advantage of this type of plan is that your employer must make a contribution to it, even though the amount may be small.

An employer will establish the regulations of the pension plan and appoint people called 'trustees' to administer it. Your contributions will be automatically deducted from your salary before working out income tax.

The income you get when you retire depends on whether your employer plan is:

A defined benefit plan : pensions that provide you with an income that is related to your final salary and the number of years of service with that employer. This type of pension allows you predict your pension income, which is based on your salary and years of service

A defined contribution plan: With this type of plan you are not promised a percentage of your final salary. Instead, your pension income depends on the value of your pension fund when you come to retire. This in turn depends on:

The value of contributions paid in by you and your employer
The performance of the pension fund over that time

Any resulting fees and charges the pension provider takes for the administration of the fund.

The majority of employer pension schemes that are now set up in Ireland are defined contribution plans. This means that only an estimate of the final value of your pension can be made.

When you retire, the pension may be less than you expected. This means that you should review your benefit statement each year from the pension trustees and examine the contributions that you are making on a regular basis.

Warning: The value of your investment may go down as well as up. You may get back less than you put in.