Understanding Pensions
A pension is just a fancy savings account.
For many people, when they hear the word “pension,” they immediately think it’s too confusing and will do anything to change the subject.
Here’s the thing—pensions are not that confusing. The industry builds up a lot of complexity around them, which is what confuses people.
When you strip everything away, a pension plan is just a savings plan. It’s a very tax-efficient plan, but still just a savings plan.
It’s no different from saving for a child’s education years down the line.
If one person saved €400 into Fund A with Life Company A in a pension, and another saved €400 into Fund A with Life Company A in a child’s savings plan, with the plan charging 1.25% per year in management fees, guess what the difference in value would be after, say, six years? Not one cent!
However, the person saving for the pension will have received tax relief on their contributions, and no tax is due on the growth. The same cannot be said for the child’s college fund, but the structure is the similar.
Remember a pension is just a savings account.
Yet so many people don’t understand this and due to inaction driven by fear of making a mistake, their pensions often underperform.
This could be because they’ve moved jobs a few times and have pensions scattered all over the place.
Or perhaps they set up a plan 10 years ago and have simply never looked at it since.
How to Maximise your pension
At Ferris Financial, I conduct what I call a 5-Point Check:
What are your plans for retirement?
When do you plan to stop working?
Where are your plans, and what is the combined and projected value?
What fees are you paying?
How are they performing?
With a 30 minute chat with you and a single letter signed by yourself, which I can provide to you I can start the work on gathering this info for you.
Once the 5-Point Check is completed, only then do we look at what the next best steps are for you.
To work with me, please get in touch.
Richard@ferrisfinancialplanning.ie
087 772 9268
Thanks
R
