Why Save for My Retirement?
No matter how you see your retirement, there is no escaping the fact that we are living longer and the State Pension amount, currently €12,132 p.a., will only cover your basic needs. Being a member of a pension arrangement is a way of making sure that you will be financially secure in your retirement.
What is a Pension?
A pension is a long term, tax efficient retirement savings plan designed to provide an income for you that will allow you to enjoy a more comfortable retirement, free of financial worries. You can save for your pension through your company’s pension arrangement (CERS).
How does it work?
During your membership of CERS, contributions paid by your employer are added to contributions paid by you (if any) and the total is invested in your selected investment fund(s) (click here for more information) until your retirement. Upon reaching retirement age, your retirement savings account will be used to provide you with a range of pension options.
One option will be to take a portion of your fund as a tax free lump sum and use the balance to buy an annuity.
What happens if I leave before Retirement Age?
If you leave your job you will cease to be an active member of CERS and your contributions will stop. On leaving service you will be notified of the options available to you which for members with more than 2 years service are as follows:
- Your Retirement Savings Account(s) may remain invested with CERS. If you have registered for online access this remains available to you. You continue to have investment choices.
- As an alternative to leaving your Retirement Savings Account(s) with CERS you may take a transfer payment of your retirement savings accounts to another arrangement approved by the Revenue Commissioners for this purpose.
If your new Employer operates within the construction and related industries you may be able to continue saving for your retirement with CERS. Please contact the administration for further details.
For members with less than 2 years pensionable service you may not be entitled to the value of your Employer contributions. Please refer to your member booklet for further details.
What are the Benefits?
The government provides support for pensions saving through tax relief. Employers will get Corporation tax relief and - as an employee - you can claim tax relief at source currently at your highest rate of income tax.
All retirement savings are totally separate from the assets of your employer and the Pension Administration Company. We offer a wide range of investment choices which include a low risk Cash Fund offering capital protection.
There are a wide variety of Investment Funds available and you can opt to take early retirement at any time from age 50 with the consent of your Employer.
You can also choose to pay Additional Voluntary Contributions (see below).
From the date you join until the date you retire the team at CERS is available to provide information and one to one consultation with Members and Employers.
- 100% net allocation on all DC contributions received.
- There are charges related to our Investment Choices
- No transfer in or transfer out fees
- No initial set up fees
What are Additional Voluntary Contributions?
Additional Voluntary Contributions, or AVCs as they're more commonly known, are extra contributions you can make to your retirement savings account to top up the value available to you on retirement.
They are a tax-efficient way of saving for retirement. Income tax relief is currently available at your marginal rate as follows:
||Rate of Income Tax
||Reduction in Take Home Pay
* Note : Rate up to 2014 tax year was 41%. Rate for 2015 tax year is 40%
There are limits on the amount of AVC’s (together with any normal pension contributions) you can pay as follows:
Under age 30
||15% of Remuneration
Age 30 to 39
||20% of Remuneration
Age 40 to 49
||25% of Remuneration
Age 50 to 54
||30% of Remuneration
Age 55 to 59
||35% of Remuneration
Age 60 and over
||40% of Remuneration
"Remuneration" is defined as all income assessable under schedule E from this employment (including benefit in kind and the value of shares provided under a Revenue approved share purchase plan) and is currently subject to a maximum of €115,000.
You will move from one band to the next on 1 January of the tax year which includes the relevant birthday (e.g. if you are 40 in December 2017 you can start contributing at the rate of 25% in January 2017)
Lifetime pension limit
The lifetime pension limit is the maximum total benefit which an individual may receive from all tax approved pension arrangements (including the pension plans of previous employers). Currently, the amount of the lifetime limit is €2 million.
In the 2013 Budget, the Government introduced a cap in respect of pension schemes that deliver an annual pension in excess of €60,000 per annum. This took effect from the 1st January 2014. .
For more information click here for the CERS AVC Booklet.
Who can pay AVC’s?
If you are an active member of CERS you can pay AVCs as detailed above.
For more information on AVC’s click here
What is an Annuity?
The simplest way to describe an annuity is as a guaranteed income, or pension, for the rest of your life. The amount of income you receive will primarily be based on the size of your retirement fund and will vary by your age at retirement and gender.
At CERS we offer a variety of annuities, for example:
- Choice of guaranteed periods
- Level or increasing payment options
- With or without spouses pension
You may be liable to pay income tax on income from an annuity.