Pension savings fund
Looking to combine saving for later life with paying less tax?
Buy into a pension savings fund to supplement your state retirement pension
- Get up to 327,50 euros tax relief on what you save
- Choose your maximum amount (either 1,020 euros or 1,310 euros per year)
- Start saving from as little as 10 euros per month
Why invest in a pension savings fund?
When you put your money into a pension savings fund, you invest in shares and bonds. That means you won’t receive a fixed return and your investment could end up making a gain or a loss. However, because of the investment’s asset allocation, the long-term return is potentially higher than for a pension savings insurance plan, where you receive a fixed return.
When should you start?
The earlier the better! You can save for retirement up to and including the year you turn 64. However, you should start before you turn 55 to get maximum tax relief. When you turn 60, you pay a final tax on the amount saved. This has the added advantage that you can continue to save tax-free between the ages of 60 and 64 and still benefit from tax relief.
A pension savings contract runs for at least 10 years, but preferably should run for longer.
Return over the long-term
Pension saving through a fund is really only worthwhile if you invest for the long term. A few poor months or even a poor year isn't necessarily a disaster, because ultimately you’re saving for 20, 30 or sometimes even 40 years.
Another plus point is that you benefit from the capitalisation effect. This means that the potential return on your investment is added to what you’ve already saved and, therefore, it too can generate additional return. The longer you save, the more this effect comes into play.
Lastly, the tax relief you receive each year also significantly boosts your return.
How much does a pension savings fund cost?
- You pay a 2% entry charge.
- You pay ongoing charges.
- There are no exit charges (withdrawing your accumulated capital before the final tax has been paid, however, results in a hefty tax penalty).
- You do not pay any stock market tax.
