To that point, financial advisors stress that planning for retirement should start early to build up a solid pension fund to enable you to enjoy your retirement. It will get you into the habit of saving, and the earlier you start the more comfortable your retirement is likely to be.

The amount of money that a person needs to save for retirement depends on a variety of factors: income level, rate of returns on investments, the age they start saving and their desired retirement age.

 5 steps to a better retirement:

1. If you have yet to start your pension, there one piece of advice that your will be certain to get, STOP putting it off and START planning your retirement today.

2. Work out how much you should be saving
Generally, you should be saving about half your current age as a % of your income.  For example if you are 30years, you should be saving 15% of your income

3. Earn tax breaks as you save.  Saving for your retirement is down to you, but to encourage us to save for our future, the government will give us valuable support in the form of tax relief.  This is the most compelling reason to save through a pension. Every contribution you make to a pension, you will receive tax relief based on the rate of income tax your pay.

The table below illustrates the sort of savings you could be making:

4. Investing in your pension.  A key factor in helping you grow your retirement pot is the investment return you could earn on your pension contributions. Where your money is invested and how much risk you are willing.  Generally the further you are away from retirement, the more adventurous you can be with your investment choice.  At Future we will help you work out the best investment strategy for you.

5. Make sure your pension can change with you.
Setting up a pension is the first step on a journey which will take approximately 40 years to plan. As your circumstances and career changes so can your pension, you can take a break from payments, increase or decrease your contributions, switch funds as your attitude to risk may change.

At Future we will guide you through the process of planning your retirement.

Capital Acquisitions Tax (CAT) imposes a charge on individuals who receive a gift or inheritance where the value of the gift/inheritance exceeds their lifetime tax free threshold.  Previously no CAT was charged on monies given by an individual during his/her lifetime for the support maintenance or education of his/her children.

Finance Act 2014 introduced an amendment whereby the exemption from tax for support, maintenance and education provided during the individuals lifetime only applies to the period during which the child is a minor or, where in full time education is under age 25 years.

Therefore, maintenance etc., provided after the age of 25 years may reduce the amount of the child’s lifetime tax free amount and ultimately become taxable at a rate of 33%.

The tightening of the rules does not affect the small gift exemption under which anyone can receive gifts of up to €3,000 in any year from anyone. Adult children could receive up to €6,000 a year from their parents, assuming both parents are still alive.

The threshold on lifetime gifts and inheritances from a parent to a child is  unaffected by the Finance Bill measure. It currently stands at €225,000 and no capital acquisitions tax is payable on cumulative gifts and inheritances from a parent below this figure.

Gifts under the €3,000 small gift exemption are not counted in this figure. Where capital acquisitions tax applies, it is levied at 33 per cent.

Here are some vital pension do’s and don’ts.

The Do’s:

1.  Keep up your PRSI (social insurance) record as much as you can – so that you qualify for the maximum State pension.  To qualify for the maximum State pension, you must have paid a certain amount of social insurance contributions. You typically build up these contributions while working. However, if there are times when you’re not working, you may be able to get PRSI credits or pay voluntary PRSI contributions to keep your contribution record going.

2.  Find out what pension options your employer (if you have one) offers. Although they’re not obliged to, many employers will pay a contribution into your pension on your behalf which, combined with the contribution you’re paying in yourself, can boost the value of your pension.

3.  Start paying into a pension as early as you can. The sooner you start the more you’ll have on retirement. Contribute as much as you can afford to your pension, particularly where your employer matches the contribution you’re paying into your pension.

4.  Keep an eye on charges, particularly the recurring fund charge. You want to keep this ongoing fund charge as low as you can. Passively managed funds, which just follow the market and don’t try to beat it, will usually have much lower charges than so called ‘actively’ managed funds.

5.  Get advice from a professionally qualified adviser. Pensions are complex. Good advice can pay for itself many times over. But find out how your adviser expects to be paid and if he or she is offering independent or restricted advice.

The Don’ts:

1.  Don’t gamble with your pension fund, such as by putting it all into one investment (like a single property). Make sure the money in your pension fund is invested in various types of investments, particularly when you’re younger.

2.   Don’t move your pension pot around a lot between different institutions – chasing the next big investment ‘opportunity’. Every time you move your pot, you’ll probably pay hefty charges.

3.  Don’t be swayed by charts showing a fund’s impressive past investment performance. Funds rarely stay top performers for long and in the long run, there’s plenty of evidence to show that similar funds end up providing more or less the same investment return.

4.   Don’t have unrealistic ideas about when you can afford to retire. Life expectancy is increasing all the time. You should be prepared to continue working (maybe part-time) until you get the State pension, which is now 68 for most of us.

5.  Don’t rely on the State pension or winning the lottery.

Source: Tony Gilhawley is director of Technical Guidance Ltd – Sunday Indo Business

SPECIFIED ILLNESS COVER – WHAT IS IT?

• Specified illness cover pays you a lump sum should you suffer from one of a list of illness covered.
• This is yours to spend as you wish. It can be used to maintain your standard of living, pay for medical bills and help you cope during a difficult time.

SPECIFIED ILLNESS COVER – THE BENEFITS

It gives you a lump sum should you suffer from one of a list of illnesses covered.
This is yours to spend as you wish, for medical bills or to adapt your home to make your day-to-day life easier.

WHY CHOOSE SPECIFIED ILLNESS COVER?

FACT:

In 2013 the average age of Specified illness cover claims was 52 years

(Source: Irish Life Retail Claims 2013)

FACT:

1 in 4 state their household would struggle financially in the event that something would happen to them.

(Source: Coyne research on line survey conducted on behalf of Irish Life)

FACT:

Heart Disease is Ireland’s No. 1 cause of death

(Source: Irish heart Foundation Annual Report 2011)

Source: Irish Life

If you would like more information on Specified Illness Cover, or you would simply like to review your protection needs, Future are here to help with any questions you might have.
So for peace of mind about your future, call us today on 091 549040

Remember: You can draw on your Buy Out Bond from age 50 onward. If you become seriously ill before age 50, you may be able to draw on your Buy Out Bond immediately.

Being diagnosed with a serious illness would be an emotionally overwhelming experience if it happened to you.

You would have lots of questions. It is most likely that the first question would be “Will I get better?” and secondly “Is my diagnosis correct?”

Now, there is someone to help you answer these difficult questions.  The result could save your life.  If you or a loved one were diagnosed with a serious illness, Best Doctors can help.

What is Best Doctors?

Best Doctors is a global organisation which brings the world’s leading medical expertise to you and your family offering a second medical opinion when you need it most.

How do I access Best Doctors?

You and your family can get access to Best Doctors, if you take out a protection policy with Aviva.  All new life assurance, specified illness and income protection policies include access.  This services is available to: you, your spouse/partner and your children up to the aged of 18 (or 23 if in full time education).  This unique feature has now also been extended to the parents of the policy holder and to the parents of their spouse/partner.

Best Doctors can even be used for conditions diagnosed before you took out your Aviva policy.

Click here to see how Best Doctors work

Terms & Conditions:  Best Doctors is not available for acute, pregnancy related or mental health conditions. The service does not cover the cost of treatment, additional testing or face-to-face consultations.  Aviva Life & Pensions lreland does not guarantee the ongoing availability of Best Doctors service to its policy holders and may withdraw access to the service at a months notice.  Policy holders will receive written notification if Best Doctors service is withdrawn.  Best Doctors is not included with policies that are taken out under conversion options.

We encourage you to contact us, to see if you can avail of this service without incurring additional cost.

Contact Martina on 091 549040/ martina@future.ie

Getting started –  making a Will

Very many people start by trying to save tax and avoid legal problems.  Whilst this is vitally important, we believe that it is equally important to try and plan taking a practical approach to your  family circumstances. So start with the facts, a list of assets and who might receive them. Once you discuss this with your legal advisor, they will be able to highlight the tax consequences if you gift the assets now or Will them to someone after your death.

Why do I need to make a Will…..

• There are many good reason to make a Will:
• A Will ensures that the estate will be divided according to the individual’s wishes and not as the Succession Act dictates.
• For people with young children it provides the opportunity to appoint legal guardians to the children in the event that both parents die together.
• The exercise involves a useful financial review.  It highlights just how financially prepared your family would be in the event of an unexpected death.
• A Will is an essential part of planning for Capital Acquisitions Tax.  By making a Will an individual can for example, make maximum use of the thresholds for his/her children and the spouse and civil partner exemption from inheritance tax.

Generally speaking there is less delay and dispute wher an individual dies and leaves a Will then where no Will exists.

When is a Will Valid?

The Succession Act covers some of the requirements for making a Will.

1. A Will can be made by any person over age 18.
2. A Will must be “in writing” which can include printed or typed Wills.
3. The Will must be signed by the testator i.e. the person making the Will, in the presence of each of two or more witnesses present at the same time.
4. The witnesses are only testifying to the signature of the testator.  They do not have to read the Will, nor is it necessary for them to know what is contained in the Will.  It is important to note that a witness or any spouse of a witness cannot benefit under the Will.
5. While an individual can draft their Will in any way they want, they should bear in mind that the Succession Act of 1965 does give certain rights to an individual’s spouse, civil partner and children in certain circumstances, regardless of the terms of the Will.

Making a Will booklet

 It is important for Companies to establish, and consistently enforce, a Retirement Policy as, if an employee has not been retired in line with the Company Retirement Policy, the policy is deemed to not have been established in the business. In other words, no policy exists for retirement if all employees are not retired at the age that is set out in the Company’s Retirement Policy.

 The aims of the Retirement Policy are:

To ensure that employees make the transition from work to retirement as smoothly as possible.

• To ensure that retiring Employees are treated fairly.
• To enable employees to leave their employment with dignity and respect.
• To help maintain good workplace relationships with other employees
• To comply with all applicable legislation.

 Procedure for Retiring and Re-engaging Employees:

In some cases employers may wish to retain the services of an employee beyond their retirement age. This is something that requires careful consideration when drafting a retirement policy; it may be stipulated that the Company will consider requests to work beyond normal retirement age in exceptional circumstances. In these circumstances, there is a process that must be followed to ensure that the employee is retired and re-engaged successfully, and that the Company Retirement Policy is not invalidated as a result: 

• Management should write to the employee notifying them of their intended date of retirement.
• The Company will issue this notice not less than 3 months before that retirement date.
• Where an Employee wishes to work beyond his/her retirement age, they must make a written request to the Company not less than 1 Month before their intended retirement date.
• There should be a break in service for a minimum of 3 months before an employee can take up a new offer of employment. The Unfair Dismissals Act and Redundancy Act will not apply to this new employment relationship.
• In any event this should only be permitted for one year only and will be reviewed annually. These terms and conditions can be outlined in a new Contract of Employment.   

If you do not currently have a Retirement Policy in place it is worth making contact with a HR Provider in order to obtain some advice on the matter.

Civil Partners and cohabitants – is there inheritance tax on death?

Our society  is changing and more people are choosing to live together in non-married relationships. Statistics tell us that 1 in 10 adults in Ireland are co-habiting. With the implementation of the Civil Partnership and Certain Rights & Obligations of Cohabitants Act 2010, rights similar to those of married couples have been conferred on registered civil partners and qualified cohabitants.

What is a Civil Partner?

 A civil partner is either of two persons of the same sex who are;

1. Parties to a civil partnership registration that has not been dissolved or the subject of a decree of nullity.
2. Parties to a legal relationship of a class that is the subject of an order made under section 5 (Recognition of registered foreign relationships) that has not been dissolved or the subject of a decree of nullity.

What is the legal definition of a Cohabitant:

A cohabitant is one of two adults, who can either be of the same or opposite sex, who live together as a couple in an intimate and committed relationship and who are not related to each other within the prohibited degrees of relationship, or married to each other, or civil partners of each other.

In deciding whether or not two adults are cohabitants the following will be taken into account;

• The duration of the relationship,
• The basis on which they live together,
• If any financial dependence exists,
• Any joint financial arrangements,
• Whether or not there are dependent children, and the support arrangements for any children,
• Whether the parties present themselves to others as a couple.

What are the Inheritance Tax consequences for Civil Partners and Co-Habitants?

Married couples or registered civil partners are exempt from inheritance tax.  This exemption only applies for legal spouse and registered civil partners.  The same rights on death have not been granted to cohabitants.

A qualified cohabitant now has the right to apply for provision out of their deceased co-habitant’s estate within six months of grant of representation.  However, it is not an automatic right as in the case of a civil or married partner.  While the surviving cohabitant partner has the legal recourse to claim from the estate of their deceased cohabitant partner, no change has been made to the Capital Acquisitions Tax.

All other co-habiting couples are treated as strangers for inheritance tax purposes. Thus the surviving cohabitant may still have to pay inheritance tax on the value of the assets. However cohabiting couples may  qualify for Family Home Relief

What is Family Home Relief?   

The Finance Act 2000 introduced a complete exemption from Inheritance Tax on the value of “a dwelling”, provided the person inheriting the property satisfied certain conditions – basically that it was, and continues to be, their home. This is commonly referred to as “family home” relief. The relief is available to any individual who satisfies the conditions and not just too qualified cohabitants.

To qualify for the exemption the person who inherits the home must:

• Have occupied the house as his/her sole or main dwelling for three years prior to the date of the gift/inheritance .
• At the date of the gift/inheritance not hold an interest in any other dwelling house
• Continue to occupy the house as his/her sole main residence for 6 years after the date of the gift/inheritance.

It is important to understand the tax and inheritance consequences for individuals in a non-marital relationship as you may get a nasty shock.  Understanding the legal position means you can plan to ensure your loved ones are protected and provided for adequately.

This blog is a limited amount of information on a very broad subject.  For full details you could refer to information provided by the Citizens Advice Bureau.