Protect your Finances – Save for the Future

Construction Worker

In October, the Construction Industry Federation ran another successful Construction Safety Week. This week each year serves as a reminder about the health & safety of everyone involved in Construction.  The message is ultimately about providing people with all of the relevant information available to enable them to protect themselves. Protecting your finances is something to be mindful of also. The way to protect your finances is to save for the future and to insure against the unexpected.  It is that simple.  It is complicated because there are so many options available to people, but hopefully this piece alleviate some of the confusion.

Saving for the future.

A pension is simply a long-term savings policy with tax relief.  It is the most tax efficient way to save for the future.  If you have access to pension scheme, rejoice!

Life Cover

If you have purchased your own home, you will likely have Mortgage Protection and this is indeed a type of Life Cover.  Mortgage Protection will pay off any outstanding balance on your mortgage if you die and it is designed to decrease as your mortgage decreases.  This is all it is for however, nothing else is covered!  If you have dependants then mortgage protection alone simply is not enough.  Death before old age is an unlikely occurrence, but it happens nonetheless and while we cannot live our lives expecting the worst – we can be financially prepared for it.

Income Protection

Income Protection is an insurance policy that pays your income in the event that you become ill or are injured.  It can pay you until you recover, or until you retire.  I often talk about longevity when I am talking about pensions, i.e. the fact that people are living longer and so the increased need for income in retirement.

From age 65, men can expect to live an average of 23.8 years, while women can look forward to an average of 25.3 years.  While this has an impact on saving for your retirement, it also means that during your working life, being diagnosed with a serious illness is a greater risk to you than death.  The Life Assurance industry claims experience tells us that you are likelier to suffer from Cancer, a Heart Attack or a Stroke before you retire than you are to die before age 65.  In my opinion, Income Protection is one of the most important insurances you can have to protect your finances.

Specified Illness

This is also known as Serious Illness cover.  Why consider serious illness cover? It pays out a cash lump sum if you are diagnosed with an illness from one of the many serious illnesses covered by the plan – illnesses such as Cancer, a Heart Attack, or a Stroke (subject to policy terms and conditions).  This cash lump sum would help remove some of the financial and emotional stress associated with a serious illness, affording you the opportunity to take the time off work, to help pay for specialist medical treatment or even to help cover day-to-day household bills such as childcare.  It may also be used to pay off debts while you are recovering.  If you are diagnosed with a serious illness you have enough to worry about, making ends meet should be the least of your concerns.

Do you need cover?

You should establish what exactly you would do if you were hit by illness or injury.  You should quantify how long your income would continue and how far your savings would stretch. If you do not have any cover in place, and your savings are not enough for you, you might consider reviewing your needs with your financial adviser.

 

Susan O’Mara, Financial Services Consultant with Milestone Advisory 

For further information please contact Susan O’Mara at: susan@milestoneadvisory.ie or phone: 01-4068020

Milestone Advisory DAC t/a Milestone Advisory is regulated by the Central Bank of Ireland

 

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Employers should look at a broader benefits package when trying to attract or retain employees.

We are all aware that there continues to be a shortage of skilled labour in the construction sector and employers are finding it difficult to attract and retain staff.  Employers realise that to try to attract staff they need to be creative and have launched a number of different initiatives.  However, beyond these initiatives, prospective employees will always turn their attention to the benefits on offer when deciding whether to join a company. Read more

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New Year, New Decade

In this edition of Irish Building Magazine, we look forward to a New Year, a new decade and what might the future the hold in the pensions’ world.

It doesn’t seem that long ago since we celebrated the arrival of the new century and now we are into the 3rd decade of that century – time marches relentlessly on. As we settle into 2020 maybe now is a good time to reflect on the impact that time has had on our lives and to consider the future and what it may hold for us, in the pension’s world anyway!

Normally, around this time of year we ponder on changes we can make in our daily lives and if you do not have a pension plan then maybe starting one could be one of your better New Year Resolutions. You may not feel that you need to save for your retirement but here’s 3 things to consider – The State Pension amount, service gaps and longer life expectancy.

The State Pension

Firstly, think of your annual take home pay which you currently live on. Now, compare that figure to €12,912. Could you live on this amount a year? That’s the maximum State Pension amount for a single person. Will this amount enable you to do all those things on your bucket list that you’ve planned for when you’re finished work? I’ve heard the drop in income from the time you are working to the day you go on to state benefits being described as falling off a cliff. Not a pleasant image and certainly something we all want to avoid if we can.

Service Gaps

During your career, have you already or do you plan to take a break for one reason or another? Maternity or paternity leave, home care, rearing of children? This can affect state pension entitlements and can also reduce the number of years you have to save towards your retirement.

Longer Life Expectancy

On a positive note, our life expectancy is increasing; 50% of those born today are expected to live to 100. And indeed some of our CPAS pensioners are over the age of 100 with the oldest being 105! As well as this, the state pension age is increasing and will be age 68 by 2028. While living longer can be good news, what this also means is that our savings have to stretch further and last a lot longer. That €12,912 a year just isn’t going to cut it.

Tax Incentives

The government want us to save for retirement so what incentives have they given us? Often going unnoticed because people pay pension contributions from their salary at source, the tax break on pension contributions is one of the most generous available from the Revenue. Tax relief is available at your marginal rate of tax and the table below shows you the net cost of a €100 pension contribution based on your current rate of tax.

And the tax breaks don’t stop there.

Employer contributions receive corporation tax relief as they are offset against profits before tax and they are not added to employee’s salary as a Benefit in Kind. Investment growth on pension fund savings is tax free and at retirement, members can receive a sizeable amount of their fund as a lump sum also tax free (subject to Revenue maximum limits). Annual pension income is subject to tax under the PAYE system but as a pensioner the tax allowances are generous.

Next Steps

Now is the time for the construction sector to make a difference to the future of all their employees through pension savings. CPAS can facilitate this on the same terms as site workers through the Construction Workers Pension Scheme or we can design a bespoke arrange for individual employers and members through the Construction Executive Retirement Savings (CERS).

Planning for the Future

As in life, there are many variables and changes. Planning for retirement and protecting your financial future involves forming expectations about income and expenses over the rest of your life, based on present assumptions. As the pension administrator for pension schemes in the construction industry, we have a range of solutions to help you prepare and protect your future investments. Whether you are self-employed, running a large company with multiple staff requirements, looking for life and income protection, we can help.

For more information and to find the right solution for you, contact our team for a no obligation discussion. Our team of financial specialists will put you in touch with the right team member. No obligations, no hidden fees, no jargon – just a straight forward chat to help you secure your present and your future.

Contact us via email (info@cpas.ie) or by phone (01) 223 4949

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