In short, the answer is no but let’s review the need for a pension.
Simply a pension is a savings plan. You put money into it weekly, monthly, annually etc. and when you stop working, you use your pension to fund the rest of your life.
The government want you to provide for yourself when you retire and
due to this fact, the government make contributing to your pension very attractive vs saving into order saving accounts.
What makes pensions attractive?
- Tax relief on contribution: for every €1 you put into a pension, you save on tax. For example, if you pay tax at the 40% tax rate, then it will cost you 0.60c to contribute €1 to your pension.
- It grows tax-free: compared to an investment where you may be subject to taxes such as exit tax.
- Tax-free lump sum: when you stop working, you can potentially get up to €200,000 tax-free from your pension.
With the incentives listed above, it may be a shock that not everybody has a pension. In fact, almost 4 in 10 workers in Ireland don’t have a pension.
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