IT’S TIME TO REVIEW YOUR PENSION
The personal tax return deadline is at the end of October. Whether you are an employee, self-employed or a company director, it is an opportunity to review your taxes. This will ensure that you are claiming the credits you are entitled to and that you are not paying too much tax.
One of the best ways to reduce your tax liability is contributing to your pension. The earlier you start your pension the better, but it’s never too late. We recommend that each of our clients review their pension on an annual basis.
Please get in touch if:
- you would like to review your existing pension with us.
- you would like to start a pension and need advice.
- you are a member of an occupational pension plan, but you would like to make an additional lump-sum pension contribution.
- you have several pensions with companies you used to work for, and you would like to consolidate them.
We can schedule a time and place to meet that suits you best either in our office in Shankill or a location nearer to where you are.
We look forward to hearing from you.
The cost of education is high so it makes a lot of sense to plan ahead and build up your savings year-on-year. One way of doing this is to save the Government child benefit of €140 per month but you can choose to save as little or as much as you decide. It is always a good idea to talk to a financial adviser before making investment decisions.
Finance Corner – Ask the Expert
Question: How much does it cost to put my child through the education system in Ireland and what is the best way to budget for this expense?
We all want to give our children the best possible start in life and a good education is a top priority. However, this can be a lot more costly than you might realise. The cost of putting just one child through school and university can easily run into tens of thousands of euro. If you have two or more children then you’re going to have to dig even deeper to keep the educational roadshow up and running. Contributing to a savings plan can help ensure your child’s future education.
Your child’s first days at school are a big milestone. Their first day at school is also your first day of many years of (worthwhile) expense! The average cost of sending a child to primary school each year is €830. The total cost for one child in primary school over 8 years amounts to an estimated €6,640.
The cost of education gets even higher as your child moves into secondary school. The average annual cost of education for a child entering first year is €1,495. This results in a total estimated cost of €7,218 over the 6 years in secondary school. If you are looking to send your child to a private school then you will have to cover the fees on top of all the other costs.
Local Fee-paying Secondary Schools – Annual Costs:
CBC, Monkstown €4,380
Holy Child, Killiney €5,950
Loreto Abbey, Dalkey €4,050
St Andrew’s College, Blackrock €6,720
Blackrock College, Co Dublin €6,950
St Gerard’s, Bray €7,150
St Joseph of Cluny €4,650
Source: Zurich Cost of Education Survey 2018 / The Irish Times
If you would like to start regularly contributing towards your child’s education then get in touch with us on ph. (01) 2393220 or email firstname.lastname@example.org or email@example.com for more information.
A personal pension is a long-term investment plan to provide for your retirement. You will have a choice of funds into which you can invest your premiums. The funds you choose will depend on the level of risk you are happy to take to achieve a return on your investment. Significant tax relief is available on the contributions you make whether you make regular contributions or an annual lumpsum.
Your contributions can invest in a mix of shares, bonds, property and cash. The value of your investment will rise and fall in line with the values of investment funds therefore you are not guaranteed any specific personal fund value by retirement age. Pensions can be complex products, so you may wish to get financial advice.
Finance Corner – Ask the Expert
Question: I am self-employed, and I want to set up a personal pension. Is it a better idea to contribute an annual lumpsum or to make regular payments throughout the year?
There are advantages to each of these investment approaches. The most important decision is the one you have already made which is to start your contributions! The earlier you start contributing to a pension the better off you will be at retirement. Don’t worry, even if you are late in the day starting your pension it’s still possible to build up a significant sum by saving regularly. Regular contributions are flexible, so you can stop and start them as you wish or change the amount. You can also change where you invest to suit your views and the level of risk you want to take.
Regular investing has the advantage of providing some additional security to those of us who find the idea of investing in the stock market stressful or daunting. By investing regular monthly payments, rather than a larger lump sum in one go, an investor ends up buying more shares or units when prices become cheaper and fewer when they become more expensive. This effect is known as ‘euro-cost averaging’, and over a period can help smooth out the highs and lows of the market. Though, as with all investments, there are still risks and you could get back less than you put in especially over the short term.
For example, if you invest €100 every month into a fund, the cost of the units for each purchase will depend on how the assets in the fund have performed. For example, if in March the units’ cost 50c each you would get 200 units for €100 invested. Then if in April they are 54c each you would only get 185 units for the same amount of money.
Euro Cost averaging does not necessarily work in your favour and investing an annual lump sum might work out better depending on the cost of investing on any given day. However, it is notoriously difficult to ‘time’ the market. The real key to a successful investment strategy is time in the market (investing for the long-term). Monthly investing offers a systematic approach that can offer a greater level of security and peace of mind.
If you would like to start regularly contributing towards a pension then get in touch with us on ph. (01) 2393220 or email firstname.lastname@example.org or email@example.com for more information.
Finance Corner – Ask the Expert
Question: I have been contributing into a pension for years and now that I’m approaching retirement what are my options?
You will have several options at retirement which will depend on the type of pension that you have. The main options are:
- Take a tax-free cash lump sum – most people take the maximum amount allowed as this is more tax effective than other options. The amount you can take is dependent on your particular circumstances but there is a lifetime limit of €200,000.
- Invest in an Approved Retirement Fund (ARF) and /or Approved Minimum Retirement Fund (AMRF) – this is the most suitable option if you have taken a tax-free lump sum of up to 25% of your pension fund and wish to invest the remaining balance. Investing your pension means accepting that the value of your pension could fall as well as rise. You can make regular withdrawals from the fund and you can pass on the money in your ARF / AMRF when you die. Depending on how big your pension fund is you must hold part of your fund in an AMRF until you are 75 (unless you can confirm that you are in receipt of a guaranteed income for life of at least €12,700). The funds in your ARF will grow tax free but any income taken from the fund will be taxed.
- Buying an annuity is your alternative to investing in an ARF. An annuity will suit you if you require a guaranteed pension income for the rest of your life after you retire. It is important to be aware that unless you buy an annuity with a guaranteed payment period or spouse’s pension you pension income stops. Any income that you receive from an annuity is subject to tax. The amount of income you receive will be based on, among other things, your life expectancy at retirement – so will vary by retirement age and gender – and the size of your retirement fund.
- Taxed Cash Lump Sum. After you take your tax-free cash, you can take all or part of the balance of your fund as cash and pay tax on it. To take this additional amount as taxed cash, you will be required to invest €63,500 (or the remainder of the fund, if less) into an AMRF, or use the €63,500 to buy an annuity. However, you do not need to satisfy this requirement if you have a guaranteed pension income of €12,700 p.a. or you are 75 years or older. Any money that you withdraw in this way will be taxed as income at your marginal (higher) income tax rate and may also be liable to PRSI and the Universal Social Charge (USC).
If you have a group pension or an executive pension you also have the option to take a retirement lump sum of up to one-and-a-half times your final salary, depending on the length of time you have been employed. The balance of your pension must be used to buy a pension for life. As you can see retirement planning can be complex, if you are unsure about your options, we recommend that you should give us a call on 01-2393220 for an obligation free chat.
Key tax benefits of a pension
Income tax: The amount you pay into your pension will be eligible for up to 40% tax relief.
Tax free growth: the money you contribute to your pension is allowed to grow tax free under current legislation.
Tax free retirement lump sum: Up to €200,000 of your pension may be taken as a tax free retirement lump sum. Even where the retirement lump is greater than this, the next €300,000 is only taxed at the standard rate. This very attractive benefit is not available on any other savings plan!
As the tax deadline looms find out why now is the time to review your pension plan.
Pension season is upon us again and as always this is the best time of year to review your pension plan. When you retire, you’ll expect to maintain the same standard of living, yet have more time to spend with your family, pursue leisure activities and so on. Research shows that we are now living much longer. This means that you will need more income for a longer retirement. If the answer is yes to any of the below questions then you should consider a financial review before this year’s tax deadline at the end of October.
- Did you pay tax at the higher rate for a bonus or commission earned in the last year?
It may be beneficial for you to make a contribution to a pension in order to get a refund of the tax you paid. By making an AVC (Additional Voluntary Contribution) to a pension you will not only help provide for a more comfortable retirement you will also benefit from the generous tax reliefs currently available on pension contributions.
- Do you know how much of an income you will have when you retire based on your current pension plan?
We recommend that you have a target pension of around two-thirds of your earnings just before you retire. If you have yet to start a pension or if you would like to increase your pension contributions we can help.
- Are you taking full advantage of the tax relief available on pension contributions?
Do you already contribute to an occupational or personal scheme but concerned that you made not be saving enough? Making additional contributions to a pension could mean further tax relief and a more diversified pension portfolio.
- Are you self-employed with a personal pension that you have not reviewed in a few years?
We recommend that our clients review their pensions on an annual basis, it is important that the funds your pension invests in accurately reflects your age, your risk profile and your retirement goals.
- Do you have a few different occupational pension plans with previous companies that you worked with?
Pensions accumulated across multiple employers can be hard to keep track of and to locate when it’s time to retire. We will be able to review your current pensions for you and identify if you would benefit from consolidating them.
Getting professional advice when it comes to planning your future has never been more important. Our pension team at Shankill Financial Services can provide you with the practical support you need to plan adequately for your retirement.
Call us today if you would like to review your pension. A member of our team will be happy to meet you at a time that is convenient for you. Call us on ph. 2393220 or email firstname.lastname@example.org. We look forward to hearing from you.
It is important to note that the value of a pension investment fund will depend on a number of factors including investment returns, which are not guaranteed.
|Warning: The value of your investment may go down as well as up.|
|Warning: Past performance is not a reliable guide to future performance.|
Finance Corner – Ask the Expert
Question: I have a lump-sum on deposit that I’m considering investing what should I do?
So, you have acquired or saved a decent lump sum of money and it is currently sitting in the bank earning next to nothing. This is frustrating but there are plenty of options available to you.
You have already made a good choice by deciding to consider your investment options rather than going on a spending spree! Deciding to invest this lump sum means that depending on the type of fund you invest in and the level of risk you’re prepared to take, you can see your capital grow over a period of time.
It is also important not to ignore the implications that inflation will have on money that you hold on deposit. While many of us are still enjoying the benefits of historically low interest rates these same rates are playing havoc with the returns you earn on any cash savings. Inflation, over time, has the potential to erode the value of money you hold in cash.
Being nervous about investing a large amount of money is understandable. You might already have an understanding of how investing in the stock market works and you may be worried that you might end up buying just before a sudden market drop. That is why fund managers and the asset management companies that sell investment products always recommend that you seek professional financial advice from a financial broker first.
Before recommending a fund to you several factors need to be considered, for example:
- What is your attitude to risk?
- How long do you want to invest?
- How experienced an investor are you?
- What is your investment goal?
When we have established your investor profile we can then help you to decide on a suitable fund(s). We will be able to provide you with an outlook for investment markets and we have good relationships with a wide variety of asset management providers in Ireland such as Aviva, Zurich, New Ireland etc. and an excellent knowledge of the funds they have available. There are many different types of fund to choose from. Investment funds can invest in anything from company shares to government bonds or property. It is important to note that investing in a fund will always involve a level of risk.
The fund(s) that you choose will have a big impact on the kind of return you can expect. It is always possible to split your money between a number of different funds. Funds that invest in a wide range of asset classes can carry less risk as they are well diversified.
When you have decided on an investment strategy we will then guide you through the appropriate application form and once you have been issued with a policy we then provide you with regular updates on how your investment is performing. At Shankill Financial Services we send all of our clients a six-monthly investment performance update. It is also worth mentioning that no investment decisions are set in stone. Depending on the investment product you choose you will have a wide choice of funds to select from (e.g. equity / property / bonds) and you will have the option of switching at any point. You can also choose a product that offers easy access to your funds with no early encashment charges if this is a feature that you would feel comfortable having. With the help of a financial adviser, investing your money does not have to be a complicated process. This guidance can give you confidence to stay invested for the longer term and achieve higher returns.
James Maguire – James is a Qualified Financial Advisor (QFA) with excellent knowledge of the financial services industry. James is a co-owner at Shankill Financial Services Ltd. James is a results-oriented financial adviser with an excellent track record for providing a high level of service to all of his clients. His specialities lie in the areas of pensions, investments, life cover and mortgages.
If you have a question in relation to your finances get in touch with Shankill Financial Services at email@example.com
|Warning: The value of your investment may go down as well as up.|
|Warning: Past performance is not a reliable guide to future performance.|
HOW TO PREPARE FOR THE COST OF EDUCATION
When it comes to your savings, it makes sense to talk to your financial adviser. If you’d like to take the next step, get in touch with Shankill Financial Services today.
Providing a child with the best education is what every parent wants for their children – but it doesn’t come cheap. The cost of educating your child can be expensive irrespective of whether your child attends a private or a public school. The problem is that many parents get to grips with the costs when it’s too late and end up having to fund everything out of day-to-day expenditure.
The cost of education in Ireland
The average cost of sending a child to primary school each year is €766. The total cost for one child in primary school over 8 years amounts to an estimated €6,128. The cost of education gets even higher as your child moves into secondary school with that annual average cost rising to €1,629 for a child entering first year. This results in a total estimated cost of €7,734 over the 6 years in secondary school. If you are looking to send your child to a private school, then you will have to cover the fees on top of all the other costs.
The cost of college doesn’t come cheap either. The annual student contribution for university is currently €3,000. If your child was to go on to do a four-year course at university, you would be expected to hand over €12,000, and that’s excluding accommodation, transport, food and book costs! Of course, there are many other expenses along the way – you might want to give them a head start with buying their first home, buying their first car or helping them set up their own business.
So how can you prepare for this expense?
The earlier you start saving, the better. There are many savings plans available which allow you to invest in funds. In recent years money being held on deposit (e.g. in bank deposit accounts) is not earning much interest, that is why investing in a fund that suits your risk profile can be a good option for those who want to set up a long-term savings plan. It is always a good idea to get advice from a financial adviser before choosing an investment product.
By investing your savings regularly through an investment fund(s), you can access a broader portfolio of assets than could be achieved by an individual saver. You can choose a fund which matches your investor profile, in terms of the level of risk you wish to take. It is important to note that this value may decrease as well as increase. Investment returns are not guaranteed.
Some parents choose to save some, or all, of the Government child benefit. If you saved €140 per month for 12 years (as at April 2018) from when your child was born, by the time they started secondary school you could have built up savings of €25,032*.
*A gross investment return of 3.3% per annum is assumed. On encashment, partial encashment, assignment, death or on each 8th anniversary of the policy, tax is deducted on gains made. The figures shown, provided by Zurich, allow for the deduction of tax (currently 37%). Contribution increases of 2.5% per annum are assumed. An annual management charge of 1.25% and an allocation rate of 101% apply. A 1% government insurance levy applies on all contributions but may change in the future.
Source: Zurich Cost of Education Survey & Shankill FS Ltd.
Warning: These figures are estimates only. They are not a reliable guide to the future performance of your investment.
Warning: The value of your investment may go down as well as up.
COULD YOU BE GETTING A BETTER DEAL ON YOUR MORTGAGE?
“Experts are predicting an explosion in the fixed-rate mortgage market in Ireland as the battle between lenders heats up.”
You could also be saving money on your life insurance policy and mortgage protection
Contact us on 01-2393220 or firstname.lastname@example.org
Most of us are now prepared to shop around when it comes to getting a better deal on household services such as energy providers, broadband and television packages or bin charges but can you say the same for your mortgage provider? Probably not, but unless you are on a tracker mortgage this is something worth considering. Not only could you save yourself thousands of euros over the length of your mortgage with little effort on your part you could also get cash back for switching with some banks offering as much as €3,000.
A recent article in the Sunday Independent highlighted the fact that “experts are predicting an explosion in the fixed-rate mortgage market in Ireland as the battle between lenders heats up.” Permanent TSB, KBC and Ulster Bank are among the banks who have all recently reduced fixed rates for mortgages, meaning potentially savings of hundreds of euro each month for home owners. As a result, numerous mortgage holders are now making the switch to a fixed-rate mortgage from standard variable rates.
Switching is not as complicated as you may think…
Reasons why you may want to consider changing your existing mortgage provider:
- You could avail of a mortgage with a lower annual percentage rate (APR).
- In current market conditions, you may want to switch from a variable rate of interest to a fixed rate of interest.
- Do you want to re-mortgage your home to assist with building an extension or carry out works on your house?
At Shankill Financial Services we consider your personal circumstances before recommending switching provider. We make sure that the savings you would make by switching will outweigh the costs. Shankill Financial Services were Shortlisted for Mortgage Broker of the Year at the prestigious LPI Awards.
Things worth considering before contacting your financial adviser are:
- Is your current mortgage less than 90% of the value of your house?
- How is your credit history?
- Is your income secure?
- If you decide to switch lender, you will probably have to pay:
o a valuation fee, although some lenders will offer to pay this cost.
o legal fees and other charges, but again some lenders may meet this cost or pay a contribution toward it.
o a fee to cover the cost of breaking your fixed rate if you don’t have a variable-rate mortgage.
15% DISCOUNT ON LIFE ASSURANCE POLICIES
Many people do not realise the financial impact that premature death can have on a family. Yet the reality is many families in Ireland remain underinsured. Did you know that only one in three families in Ireland have life cover in addition to their mortgage protection contract. A life insurance policy can cost as little as €30 per month (price estimate based on a 40 year old female non-smoker). Put your mind at rest and talk to us on ph. 2393220 to avail of a discount on a Life Insurance Policy for you.