These days, thanks to healthier lifestyles and advances in medical treatments, we’re living longer. After retirement, we can have another 30 years to look forward to. The earlier you start a pension, the easier it is to build up a good sized fund. This could allow you to enjoy a comfortable retirement and avoid having a pension gap. With the qualifying conditions of the State pension uncertain for the future, it’s never been as important to take responsibility for you own pension savings. But, we understand that calculating and setting up a personal pension alone can seem daunting so take a look below as we debunk 10 of the most common myths surrounding pensions:
Myth #1: I don’t need a private pension, the state will support me.
After retirement, we all want to maintain our current standard of living. To do so, the majority of people would need some form of private pension on top of what the Government provides. The current maximum state pension is approximately €12,000 per year. This will cover your most basic needs, but unfortunately leaves little room for anything else.
Myth #2: The choices you make about pensions (like your contribution payments) are inflexible.
We understand that everyone needs flexibility in their lives - when it comes to changing jobs, moving home and so on. And we believe it should be the same with your pension. Our pension products are very flexible. You have freedom to decide how much you pay (subject to maintaining the minimum contribution, which is currently just €100 monthly), whether you want to change the amount you pay, take a payment holiday or change how your money is invested.
Myth #3: My pension will be enough to see me through retirement.
A well-funded pension could be enough to see you through retirement. And a good way of knowing if your pension is well funded, is to use a tool like our Pension Gap Calculator. This tool will help you work out what you should be contributing in order to have the pension you’re aiming for when you retire.
Myth #4: My pension fund is available as a tax-free lump sum.
This is partly true, upon retirement; part of your pension fund is available as a tax-free lump sum. Current regulations (as at October, 2017) mean that with most pensions, you are able to withdraw 25% as a tax-free lump sum.
Myth #5: My pension could be wiped out by inflation
With many pension contracts you can build in a mechanism whereby your regular contributions will be automatically increased every year by approximately 5%. This should offset some of the effects of inflation.
Myth #6: Pensions are too complex.
Through our Pension Gap Calculator and the removal of some complicated fees, we at Aviva are dedicated to making pensions as simple and easy to understand as possible. A pension is ultimately a long-term savings plan that allows for tax relief on your contributions. You can download our Pensions Made Simple booklet here.
If you start early you won’t be able to access it for 30 or 40 years, and that’s the point; your pension is an investment to help ensure you continue to enjoy a good quality of life after you retire.
Myth #7: Pension funds have hidden charges and fees.
We’ve recently removed the monthly policy fee and fees for switching funds on our pensions to help make them as easy to understand as possible and bring pensions back to basics. There are other charges on our pensions, but we’re not introducing extra ones, or increasing charges elsewhere. For full details on what charges are on our pensions, please read the relevant pensions booklet and speak to your financial broker. We’re proud to be simplifying our products and saying goodbye to the monthly policy fee. You can find out more about this initiative here.
Myth #8: You have to stop work and retire to draw on your pension.
You don’t necessarily have to stop working in order to draw on your pension. Some contracts allow you to draw pension benefits and continue to work once you reach the normal retirement age.
Myth #9: I cannot cancel my pension policy once I start.
You can cancel your pension during a 30-day cooling off period. Once you go beyond the 30 days, you can decide to stop paying into your pension or move it to a new provider or scheme. You have the option to switch to a different pension scheme.
Remember you’re not on your own! - Independent advice is there for you
If you haven’t started your pension yet, now is the time to do it. For more information on pensions, click here or speak to your financial broker. Don't have a financial broker? Use our geo locater to find and contact a financial broker near you.
Warning: If you invest in this product you may lose some or all of the money you invest.
Warning: If you invest in this product you will not have any access to your money until you retire
Warning: The value of your investment may go down as well as up.
Warning: These products may be affected by changes in currency exchange rates
Aviva Life & Pensions UK Limited, trading as Aviva Life & Pensions Ireland, is authorised by the Prudential Regulation Authority in the UK and is regulated by the Central Bank of Ireland for conduct of business rules. Aviva Life & Pensions UK Limited, trading as Aviva Life & Pensions Ireland, is also regulated in the UK: by the Prudential Regulation Authority for prudential rules and, to a limited extent, by the Financial Conduct Authority for applicable UK conduct rules. Registered Branch Office in Ireland (No 906464) at One Park Place, Hatch Street, Dublin 2. Tel (01) 898 7000. Registered in England (3253947) at Wellington Row, York, YO90 1WR. © 2015 Aviva.