For individuals Archives

Auto-Enrolment: What do employers need to do next?

Posted on 30 April 202515 May 2025 by CPAS

In the latest Irish Construction News magazine, John Geraghty, Business Development Consultant, CPAS, writes that with Auto-Enrolment coming, employers face critical choices on integrating existing pension schemes or adopting the new system, requiring swift planning and communication.

Automatic-Enrolment introduces mandatory retirement savings requirements into Irish law for the first time. The requirements are set to come into effect shortly after 30 September 2025, within a few months following that date. The Department of Social Protection has recently commenced communications with employers in this regard. With this in mind, it is now imperative that employers understand their obligations and ensure they have a plan in place that suits their business and their approach to employee benefits.

EXISTING PENSION ARRANGEMENTS

Employers should decide whether they wish to use their existing pension arrangement to meet the requirements of AE or whether they will operate a dual system, i.e. continue the existing arrangement alongside the AE system. At present, membership of a pension scheme or Personal Retirement Savings Account (“PRSA”) with any level of employer/employee contribution means employees will not be automatically enrolled into the AE system. If existing arrangements are to be used alone, there are a number of key steps to take:

Ensure all employees not currently members of the scheme join the scheme.
An employee communication exercise will be required to inform employees of the changes.
Amendments will be required to scheme documentation regarding membership provisions.
Employers should consider whether there are cohorts of excluded employees and whether (and how many) employees have opted out of the scheme, and why.

NO EXISTING PENSION ARRANGEMENTS

For employers who do not currently operate pension arrangements, now is the time to consider the best option for their employees and their business.

Is it preferable to allow employees to be automatically enrolled into the AE system, or
Would membership of a Master Trust, Multi-Employer scheme, occupational pension scheme, or PRSA be a better choice into the future?

We encourage employers to complete their considerations and implement any required actions by the beginning of July of this year. A July implementation date will hopefully avoid any administrative difficulties that might arise as the new Authority implementing the AE system can apply a “look back” period of up to 13 weeks to determine the correct pay reference period for an employee to assess whether they are in scope for AE.

Eligibility for the scheme encompasses employees aged between 23 and 60 years who earn over €20,000 per year, unless they are already participants in another pension arrangement. Both employers and employees are expected to contribute to the scheme, beginning at a rate of 1.5% each, gradually increasing to 6% over a ten-year period.

Contributions are as follows:

Years	Employee	Employer	State	Total
1 – 3	1.5%	1.5%	0.5%	3.5%
4 – 6	3%	3%	1%	7%
7 – 9	4.5%	4.5%	1.5%	10.5%
10 +	6%	6%	2.0%	14%

*Employer contributions and the State top-up will be capped at a maximum €80,000 of an employee’s gross salary.

There are noteworthy distinctions between auto-enrolment and existing occupational pension schemes that employers should be aware of. For instance, auto-enrolment does not provide tax relief like traditional pension arrangements. Instead, a State top-up comparable to 25% tax relief is offered. Employers running an auto-enrolment scheme alongside another occupational pension arrangement should familiarise themselves with the two different taxation systems that will be applicable to payroll. Occupational pension schemes are more advantageous for pension scheme members paying 40% tax, while the auto-enrolment scheme may have a greater impact on the take-home pay of taxpayers on the 20% rate.

Additional Voluntary Contributions (AVCs), which allow members to enhance their retirement outcomes by contributing more to their pensions, are not currently possible under auto-enrolment. Moreover, auto-enrolment does not offer additional benefits such as life cover, sick pay, and income protection, which are valuable incentives for employers seeking to attract and retain key personnel. Employers should seize this opportunity to assess their needs and implement a solution that suits them best.

For further assistance with preparing for auto-enrolment, you can reach out to John Geraghty, Business Development Consultant, CPAS, via email at j.geraghty@cpas.ie

CPAS manages the Construction Workers Pension Scheme (CWPS) and the Construction Executive Retirement Savings (CERS), and it provides additional financial support services through Milestone Advisory DAC.

Will your Retirement Income Cover your Rent?

Posted on 13 April 202513 May 2025 by CPAS

In the April edition of Construction Magazine, Susan O’Mara writes. In a 2017 article, I explored the issue of pension scheme members reaching retirement age and still renting in the private sector.

Since 2017, little has changed. Owning your own home remains difficult for young adults and pension savings are below what would be required to enjoy a comfortable retirement if you are not a homeowner. Indeed, I could have copied the 2017 article, updated the rental amounts, and mentioned that Mandatory pensions are starting in September 2025 (and not Q2 2018 as expected then!).

In April 2023, the Pensions Council published their observations arising from the “Future trends in housing tenure and the adequacy of retirement income,” an ESRI report that they funded. Broken down between different age brackets, their report provides stark statistics regarding the impending issues for the building and pensions sector.
Below are the results of the ESRI’s detailed analysis of projected future home ownership rates:

Age Group in 2022	Expected Home Ownership % at retirement
25-34	40%
35-44	65%
45-54	79%
55-64	81%
65+	90%

Source: pensions-council-observations-arising-from-the-esri-report.pdf

If you are 65 or older now, this is unlikely to be an issue for you. The ESRI estimates that 90% of those at or approaching retirement age, own their own home. Of those renting, most rent from a local authority or voluntary body so will have low stable housing costs.

Only 2% of people in the 65 plus age bracket are in the private rental market.
While the ESRI observed that there is significant uncertainty with the youngest age group (25-34), it did place a much stronger reliance on its results for the 35-44 age group. Based on 2022 mortgage rules, the ESRI predicted that the home ownership rate for the 35-44 age group will be 65% by the time they retire leaving approximately 35% renting.
For this reason, this is a pensions problem. Where a person has higher housing costs in retirement (such as rent) they need a higher income to maintain the same standard of living than a person who has a “paid for house”.

Among the solutions suggested by the ESRI are:
• improving incomes for older households (e.g., increasing the State Pension, introducing targeted supports, or directly intervening with a household supplement)
• supporting younger people to buy their own home now through equity supports
• and/or supporting people earlier during their employment to build up more retirement savings to meet the higher costs in retirement.

The first solution will result in large additional costs for a government which is already facing the significant and increasing State Pension burden. An increase in the number of older people eligible for HAP will add to the already difficult challenges associated with an increased reliance on the private rental sector. The recommendation for more supports now to help our young people achieve secure housing makes sense for the current economy and for long term security of tenure for our future pensioners. This will require an increase in supply of homes for first time buyers or through the cost rental scheme.

The final part of the solution is that more retirement income will be needed. Another significant challenge. Employees cannot do this alone and will need the support of employers and the Government through tax breaks. The Government appear to be finally starting to meet the pensions challenge. The expected start date for Auto-Enrolment (AE) pensions is 30th September 2025 and from this date, pension savings will be mandatory for all employees over age 23 earning more than €20,000 p.a. While it will take 10 years for the rates to increase from a low starting point of 3.5% to 14%, this will significantly impact workers in the ESRI study, particularly those in the 25-34 age bracket. The rates include contributions from employers and a top-up from the State.

For employees already in a pension scheme, they have a head start on their pension savings and have the option to pay higher than the AE rates (through AVCs) and make greater savings through tax relief at their marginal rate. The introduction of AE may also have an impact on their outcome too. Once AE is fully implemented, it will raise the bar for higher pension contribution rates for all pension schemes.

As stated in my 2017 article, the housing crisis does not simply affect low paid workers, it has the potential to affect an entire country, albeit 20 to 30 years into the future. It is the decisions
made today as a society that will change what that future looks like. Furthermore, it is the decisions you make today, as an individual, that will determine what your own future looks like.

CPAS provides the administration support for the construction sector’s dedicated pension schemes and is registered to provide the core administration services to the Trustees of the Construction Workers Pension Scheme (CWPS) the Construction Executive Retirement Savings (CERS), and provides additional financial support services through Milestone Advisory DAC.

For more information, contact:
Susan O’Mara on (01) 223 4942, susan@cpas.ie
or visit www.cpas.ie.

Financial Health and Wellbeing: Women in Ireland need Greater Financial Security in Retirement

Posted on 7 March 20257 March 2025 by CPAS

In the latest edition of Construction Magazine, Susan O’Mara, CPAS Business Development Manager and Milestone Advisory Director, highlights the urgent need to improve pension outcomes for women. A quick online search makes it clear that change is necessary, and raising awareness among both women and their employers will be a key driver in bridging the gap.

Pensions are a crucial part of financial security, especially for women, who tend to live longer and may take career breaks for caregiving. In Ireland, the life expectancy for women is 3.6 years longer than men, which means their pension must last longer.

What you should know (and what you can ensure others know)

Types of pensions in Ireland

State pensions

There are two types of state pensions in Ireland: the contributory and non-contributory. The contributory state pension is based on PRSI contributions.

To qualify, you must have started paying PRSI contributions at least 10 years before you draw down your pension and have enough PRSI contributions. You can find out if you have or will have enough contributions by requesting a copy of your contribution statement using MyWelfare.ie.

There are contribution credits available for those who have gaps in their PRSI records for time spent caring.

The non-contributory pension is means-tested and is a payment for those who do not qualify for the contributory state pension. The full state pension currently provides €289.30 per week (€15,043.60 per annum), which while certainly valuable, is a modest income not intended to provide more than a basic lifestyle.

Occupational pensions

Many employers offer pension schemes, where both you and your employer contribute. These are highly recommended as they provide extra income on top of the state pension.

Other types of pensions include personal retirement savings accounts and personal pensions, which are typically used by individuals who want to save for retirement but do not have access to a workplace occupational pension.

Pension tax benefits

You get tax relief on pension contributions – this means you pay less tax while saving for retirement.
Pension funds grow tax-free until retirement.
You can access a portion of your pension fund tax-free at retirement.

The value of compound interest – the eighth wonder of the world

Put simply, a pension is a long-term savings account with tax benefits. Once you get to retirement, you can then draw on those savings to replace your income.

Compound interest is valuable as it allows money to grow exponentially over time. Unlike simple interest, which only earns interest on the initial principal, compound interest earns interest on both the principal and previously accumulated interest.

This leads to accelerated growth, making it a powerful tool for saving and investing. The longer the money stays invested, the greater the impact due to the ‘compounding effect.’

Serious considerations for women

While much of this is applicable to everyone, women must consider the following:

Longer life expectancy: Women live longer, so they need more retirement savings.
Career breaks: Women are more likely to take time off for caregiving, leading to gaps in pension contributions.
Gender pension gap: Women typically retire with less than men due to lower earnings and fewer contributions.

What are the solutions?

Knowing about the issues facing women when it comes to income in retirement is an important first step.

Along with salary disparity, Irish Life research found that another key issue is a Eurostat finding that women in Ireland take an average of six years out of the workforce, primarily for maternity leave and care responsibilities. Unpaid leave directly affects the ability to make pension contributions.

Further actions that can help bridge the gap

Encouraging employers to introduce a pension-specific workplace policy, adding an additional employer contribution for a period of time for women returning from maternity leave.

AVCs – additional voluntary contributions are a key consideration for women. Contributing more after a period of leave can recover lost ground and increase potential outcomes in retirement.

Auto-Enrolment (AE) is due to start in September 2025. While AE is not the only solution, it will ensure that women not previously included in their employers’ occupational pension scheme, will either be included in their employer’s scheme or automatically enrolled into the AE scheme My Future Fund. This does not address the career interruptions, particularly as My Future Fund will not facilitate AVCs. If you have the choice to join a pension scheme or be auto-enrolled, you will have greater flexibility in an occupational pension scheme.

Education and awareness

Both women and their employers should be aware of the challenges facing women when it comes to saving for retirement.

Financial health is an essential part of overall well-being. Talk to a pension professional for the construction sector. CPAS can help anyone in the sector in any type of role plan for their future.

Contact Susan O’Mara, CPAS Business Development Manager by email susan@cpas.ie or by direct dial 01 2234942.

CPAS Proudly Supports the Lighthouse Charity

Posted on 31 January 202531 January 2025 by CPAS

Backing Those Who Build Our Communities

At CPAS, we know that construction isn’t just about bricks and mortar—it’s about people. The men and women who work on sites across Ireland keep our country moving, and their wellbeing matters. That’s why we’re delighted to support the Lighthouse Charity, an organisation dedicated to looking after construction workers and their families.

Recently, CPAS made a donation to the Lighthouse Club, helping to fund vital services like mental health support, financial aid, and their 24/7 Construction Industry Helpline. But we didn’t stop there. Our team also got stuck into a bit of fundraising themselves, bringing everyone together for a great cause.

A Christmas Fundraiser with Heart

Just before Christmas, the CPAS team decided to have a bit of fun while raising money. What started as a simple idea turned into a real community effort, with plenty of laughs along the way.

One of the highlights was a staff raffle at the morning coffee, with prizes ranging from homemade cakes to small but thoughtful gifts. You’d be surprised how competitive people got over a tin of biscuits! By the end of it, we’d raised over €600—a brilliant result, and all thanks to the generosity of our team.

Then there was the walking football match, which brought out a mix of skill, enthusiasm, and, let’s be honest, a few questionable tackles. Yes, tackles! That’s what they’re called in walking football! It wasn’t exactly Premier League standard, but it was great craic and a reminder of how important it is to look after not just our finances, but also our physical and mental wellbeing.

Supporting Those Who Support Us

The Lighthouse Charity does incredible work behind the scenes, offering support to those in the industry who need it most. Whether it’s a tradesperson struggling with their mental health, a family facing unexpected hardship, or someone in need of legal or financial advice, the charity is there to help with no strings attached.

At CPAS, we’re proud to play a small part in that mission. Construction is more than just a job; it’s a community. By backing the Lighthouse Charity, we hope to encourage others in the industry to do the same. Because when we look after each other, we all build a secure future—both on and off-site.

If you or someone you know in the industry needs support, Lighthouse’s Construction Industry Helpline is there 24/7. No one should have to face difficulties alone.

How to approach financial health for a new year

Posted on 16 January 202516 January 2025 by Susan O'Mara

In the first edition of 2025’s Construction Magazine, Susan O’Mara, CPAS Business Development Manager and Milestone Advisory Director writes. People often see the beginning of a new year as a fresh start, usually leading with their health, and you will certainly see gym memberships increase around this time. Along with physical health, your financial health is an important aspect of your overall health and well-being. The start of a new year is a good time to give your financial health a boost.

Steps towards improving financial health

Financial health refers to the state of a person’s overall personal financial situation. It considers factors such as income, expenses, debt, and savings as measures of overall financial stability. A financially healthy individual has sufficient income to meet their daily needs, pay down debt, save for future goals, and manage unexpected expenses. Improving financial health requires effort, discipline, and a clear strategy. Here are practical steps that can lead to better financial well-being:

Create a budget: A budget helps track income, expenses, and spending habits. Tools like spreadsheets or financial apps can simplify the process and provide clarity on where money is being spent. Knowing your spending habits may help you to take a more practical approach to your budget. Furthermore, looking at your annual budget can allow you to keep track of what you are spending on goods and services. Using this as a reminder to shop around and switch providers for utilities if there is better value available.

Setting goals and saving: Set financial goals for homeownership, retirement, education, or holidays. Automatic savings is a great way to contribute toward these goals.

Pay yourself first: This means that you should prioritise a regular savings amount rather than only saving what is left over after you have paid your bills. Another important part of saving is building an emergency fund. Conventional wisdom tells us that we should set aside at least three to six months’ worth of living expenses in an emergency fund. This financial cushion can prevent debt accumulation during times of crisis.

Reduce and manage debt: Focus on paying down high-interest debt first, such as credit cards or payday loans. Consider debt consolidation or negotiate lower interest rates with lenders if needed.

Protect your assets: Ensuring that you have adequate insurance coverage, such as health insurance, life, income protection, and home insurance, to protect against unexpected financial shocks. You may not need all of these if you have no family and no debt, but you may require income protection to replace an income if you were unable to work due to illness or injury. On the other hand, if you have a family and mortgage, you are likely to need a combination of Life Cover, Income Protection, and Serious Illness cover. Balance is key, and you should speak to a financial advisor to ensure you are not over-covered in one area and under-covered in another.

Retirement planning: If you are not already participating in a retirement savings scheme or pension plan, now is the time to act. This is a fundamental way to protect your future financial health. A recent article published on RTE.ie quoting findings released by the Pensions Council found that a single person would need a pension of €33,600 a year to have a “comfortable” retirement. With the government’s auto-enrolment scheme due to commence in September 2025, pensions will be a hot topic in 2025. In the current pensions landscape, the tax relief available on pension contributions at your marginal rate of tax and the benefit of the tax-free investment growth positions pensions as an efficient way to fund your retirement.
If you are already in a scheme or plan – do you know the value of your fund? Do you know what it will provide for you at your retirement age? If not, find out. All providers send members an annual benefit statement – this document provides you with a fund value as well as an estimate of what your pension fund will be worth when you reach retirement. You may also be able to access this information online in a pension portal. Once you have done your budget, you will have a clearer idea of your income requirements and what they might be in retirement, assuming you wish your lifestyle to remain the same. What is the difference between your ideal income in retirement and the projection on your benefit statement? Do you need to bridge the gap? Even a small regular additional voluntary contribution (AVC) can achieve this in the long term. If you are close to retirement, it may be less about making contributions and more about planning which option suits you best – Annuity or ARF – you should engage with this decision now and not leave it until the day you hit the golden age!

Financial stability
Financial health is an essential part of overall well-being. By focusing on budgeting, saving, debt reduction, and financial literacy, individuals can achieve financial stability and peace of mind.

With the help of technology and a commitment to continuous improvement, financial health is an attainable goal for everyone.

Contact your pension provider to get expert help.

CPAS provides the administration support for the construction sector’s dedicated pension schemes and is registered to provide the core administration services to the Trustees of the Construction Workers Pension Scheme (CWPS) and Construction Executive Retirement Savings (CERS).

Contact Susan O’Mara via email susan@cpas.ie or phone 01 2234949.

Tips for Managing Finances in Ireland in 2025

Posted on 4 December 20249 December 2024 by CPAS

In the latest Irish Construction Magazine, Darragh Hogan writes. As we arrive towards the end of 2024, and look ahead to 2025, managing your personal finances effectively remains a crucial aspect of ensuring financial stability and growth. Here are some practical tips to help you manage your finances in Ireland during this period:

Understand the Tax System

Make sure to use available tax credits and deductions to reduce your taxable income. Along with the health reliefs available, Pensions are a key tax saving area. If you save €500 into a deposit account, it will be invested from your net income. However, if you invest the same €500 into your pension account, it will be invested from your gross income. This means, if you pay tax at 40%, your €500 investment will only cost you €300.

Plan for Retirement

With the tax reliefs available, contributing to your retirement savings is a wise long-term financial strategy. Increasing your pension contributions is not only tax efficient but can secure financial comfort for you and your family in the future. If you are already contributing, perhaps 2025 is the year you explore options like Additional Voluntary Contributions (AVCs), which enhance your retirement savings and improve your income in retirement.

Budgeting and Saving

Establish clear financial goals and create a budget to track your income and expenses. There may be areas where you can reduce your spending and reallocate more towards savings. Using tools like a personal budget planner can help you stay organised and focused on your financial objectives.

Protection Policies

A good financial plan will always have an element of insured protection. Mortgage Protection is not the only life cover available or required and your personal circumstances will determine the level of life cover you may require. Do you have protection should you be unable to work due to illness or injury? If not, you may consider income protection. Income protection is a type of insurance policy designed to provide you with a regular income if you are unable to work due to illness or injury. This type of policy ensures that you can maintain your standard of living and meet your financial commitments even when you are not earning a salary. This type of cover can also be tailored to suit your needs. If you have not considered protecting your income this year, make sure 2025 is the year you plan for the unforeseen.

Investment

Many Irish households have money sitting in deposit accounts. In the short term, this is great, however, if you do not need access to the money right away, you should consider investing your money. Investments typically offer higher returns compared to deposit accounts.

Stay Informed About Economic Changes

Stay updated on the latest economic developments and government policies that may impact your finances. For instance, the Irish Government’s Budget 2025 includes expenditure increases, tax measures, and a cost-of-living package designed to support individuals and businesses. Understanding these changes can help you make informed financial decisions.

Seek Professional Advice

Consider seeking advice in 2025. A survey conducted by Brokers Ireland found that those who received financial advice are more likely to have a well-funded pension, have more valuable savings and investments have improved financial outcomes.

By following these tips and staying proactive in managing your finances, you can navigate the financial landscape of 2025 and beyond with confidence.

Here to help you navigate your way to financial security.

The Milestone Advisory team are qualified financial services consultants. We specialise in helping professionals in the construction sector and related industries.
Our team will work with you to review your finances, explaining your options in clear English.

No jargon – just the facts.

For more information, contact Darragh Hogan (darragh@milestoneadvisory.ie).

For the latest updates, subscribe to our newsletter here.

Understanding Auto-Enrolment in Ireland – A guide for employers

Posted on 21 November 20247 March 2025 by CPAS

In Issue 4 2024 of Irish Building Magazine, SUSAN O’MARA, Business Development Manager, CIF Pension Administration Services (CPAS) writes. Many employers, and the entire pensions industry, were braced for a flurry of activity to get ready for Auto-Enrolment (AE) in late 2024, early 2025.

THROUGHOUT the year however, it became clear that the Government would miss this (already delayed) deadline. We are ending 2024 with some clarity though; a commencement order signed, a start date for AE of 30 September 2025 and a new name “My Future Fund”.

This extended timeframe will give employers some relief. This time should be used to ensure that you understand the finer details and are prepared to avoid pitfalls or utilise benefits of the new scheme.
AE is a significant change in the pension landscape in Ireland. While it is designed to ensure that all employees have access to a pension scheme, there are many differences between AE and the existing pension framework. It is crucial employers understand their obligations together with the advantages and disadvantages of this new system.

Why Introduce AE?

Currently it is estimated over 800,000 workers in Ireland are not in a pension scheme leaving them solely reliant on the state pension for their retirement income. As far back as 2007, a green paper on pensions highlighted future challenges posed by Ireland’s shifting demographics. In 2010, the National Pension Framework outlined a new approach to supplementary pensions to meet these challenges; “Auto-Enrolment”. This new approach is finally coming to fruition and will result in better financial security for all in the future.

Key Points of AE

Eligibility: Employees aged 23-60 earning over €20,000 per year across all employment and who are not members of an existing pension scheme, will be automatically enrolled. Those between 18 – 22 or over age 60 can apply to be included.
Contributions: Both employers and employees must contribute a percentage of gross salary, starting at 1.5% each and increasing to 6% each by year 10. There is no tax relief on employee contributions, but the government will provide a top-up contribution starting at 0.5% and increasing to 2% by year 10. The maximum salary for contributions is capped at €80,000. Contributions are fixed at the set rates, and it will not be possible for employers or employees to pay more or less than these rates.
Opt-Out Option: Employees can opt out if they choose after six months but will be automatically re-enrolled after two years. They can also suspend contributions for one to two years.
Waiting Periods: There are none. Auto-enrolment starts from the first day of employment.

Considerations for Employers

Employers will be tasked with either proving all their employees are already sufficiently covered for pension or if not, they will need to get on board with AE.

Existing Schemes: Employers who already have a pension scheme in place need to identify any employees not currently covered for pension. Should they include these employees in their existing scheme, set up a new scheme, or use “My Future Fund”?
Understanding the differences between the options and the benefits of each is crucial.
Budgeting for Contributions: Employers need to plan for the increased pension contributions that will be required from 30 September 2025. This includes understanding the impact on payroll. The contribution rates will be phased in over the next decade to assist.
Employee Education: Whether continuing with an existing scheme or joining AE – employees are likely to have questions.
Tax Relief V State Top Up: The tax treatment of employee contributions to AE compared to an existing Defined Contribution (DC) pension arrangement will be different. As AE contributions are deducted from employees’ gross pay, they will have a greater impact on take home pay. A case can certainly be made for employees that the current tax reliefs available on DC Pension schemes may be a better option for both higher and lower earners.

AE represents a significant shift in how pensions are managed in Ireland. By understanding the key points and preparing for the changes, employers can ensure a smooth transition and help their employees secure a better financial future.

About CPAS

CPAS are the specialists when it comes to pension provision and financial advice for employers and staff in the construction sector. CPAS administer the Construction Workers’ Pension Scheme and the Construction Executive Retirement Savings (CERS).

For more details, contact Susan O’Mara via email susan@cpas.ie or phone 01 223 4949

Making the most of your retirement planning – A Look at Additional Voluntary Contributions (AVCs)

Posted on 8 November 20249 December 2024 by CPAS

As we’re approaching the end of the year, there’s no better time to take a fresh look at your pension contributions. A little bit of planning now can go a long way in making sure you’re set up for a comfortable retirement. One way to give your pension a boost is through Additional Voluntary Contributions (AVCs). This piece will cover why AVCs can make a big difference in your retirement fund.

Understanding Pension Contributions

Working in construction isn’t for the faint-hearted. It’s a fast-paced, demanding sector, and planning for the future can sometimes take a back seat. But having a solid pension plan in place can be a huge weight off your shoulders. If your employer offers an occupational pension scheme, you’re likely contributing to your pension throughout the year.

That said, regular contributions alone might not be enough to guarantee the retirement lifestyle you’re hoping for. This is where AVCs become really beneficial. They’re a simple way to bump up your pension pot and give yourself some extra peace of mind.

Why Additional Pension Contributions Matter

Here are a few good reasons to consider making additional contributions to your pension:

Tax Savings

One of the main advantages of making AVCs in Ireland is the tax relief available. You can claim tax relief at your marginal rate, which means the government essentially chips in a bit towards your retirement, depending on your income.

Boosting Your Retirement Savings

AVCs offer an easy way to add to your pension. If you’ve had fluctuating income or maybe even received a nice little bonus, putting some of that towards your pension could really pay off later.

Making Up for Lost Time

If you haven’t been contributing consistently, whether due to tight finances or other reasons, these contributions let you catch up a bit.

Compounding Returns

The earlier and more you add to your pension, the more you’ll benefit from compound growth. Those year-end top-ups could make a substantial difference over time.

What’s the Deal with AVCs?

AVCs are just extra contributions you can choose to make on top of your regular pension. AVCs are a great tool for anyone who wants to make their pension work harder for them, especially as we approach the end of the year.

Benefits of AVCs

Flexibility

With AVCs, you get to decide how much you want to contribute and when, which is beneficial if your income varies. Perfect for the construction sector, where things can sometimes be unpredictable.

Tax Relief

Like regular contributions, AVCs qualify for tax relief at your marginal rate. It’s a nice way to lower your taxable income while adding to your pension.

Investment Options

Most pension schemes offer a range of investment choices for AVCs, so you can tailor things to your own risk tolerance and financial goals. With the right choices, you might even see higher returns.

Making the Most of Year-End AVCs

Here are a few ways to make sure you’re getting the most out of those AVCs:

Take Stock of Your Finances

Have a good look at your current financial situation and decide how much you can afford to contribute without stretching yourself too thin.

Get Some Advice

A chat with a financial advisor could be really beneficial. They can help you make sense of the best way to approach AVCs based on your goals and guide you on tax savings.

Maximise Tax Relief

Remember that there are annual limits on tax-deductible pension contributions, and these vary based on your age and income. Plan your AVCs to make the most of the available tax relief.

Invest with Care

Choose investment options that suit your risk comfort level and retirement goals. Diversifying your investments can help mitigate risk while potentially increasing returns.

Final Thoughts

Year-end pension contributions, especially through AVCs, are a great way to top up your retirement savings and take advantage of any tax benefits on offer. It’s a smart way to strengthen your pension and enjoy a bit more financial security down the line. As we approach year-end, why not take a bit of time to review your overall pension strategy? It’s one of those things that will pay off in the long run—and remember, retirement planning is a journey, not a one-time thing. A little attention each year can really add up.

Talk to CPAS, or your pension provider, to discuss what works for you, visit https://cpas.ie/avc for more.

Are you ready for the revenue pension tax deadline?

Posted on 8 October 202430 October 2024 by CPAS

SUSAN O’MARA, Business Development Manager, CIF Pension Administration Services (CPAS), suggests some points you might consider with this year’s revenue pension tax deadline, 31 October, approaching.

Unlike summer, soccer, or award season, pension season is not high on the list of exciting times for most people. Understandably so! Pension season is the period leading up to the revenue pension tax deadline on 31 October. It is a time for both self-employed individuals and employees to consider making a lump-sum pension contribution.
If you are self-employed, you will be finalising your tax return at this time of the year. By making a lump sum pension contribution, you can choose to backdate the tax relief to 2023 as part of your tax return to Revenue and use the backdated tax relief to reduce any tax due for 2023.
This must be completed by 31 October, or if you pay and file your taxes online, you can avail of the extended ROS deadline to file which is 14 November 2024.
If you are an employee, you can also take advantage of this deadline. You can make a lump sum pension contribution known as an additional voluntary contribution (AVC) and claim the tax back from the previous year. For example, an employee who makes an AVC of €10,000 in 2024 can claim back €4,000 (if paying tax at 40%) from 2023.

WHAT ELSE SHOULD YOU BE AWARE OF?

Contribution Limits

For both self-employed contributions and employee AVCs, here are the limits on the amount you can contribute based on your age:
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

Please note the AVC limit is the combined value of the AVC and any normal pension contribution.

Definition of Remuneration

“Remuneration” is defined as all income assessable under schedule E from this employment, including benefits in kind and the value of shares provided under a Revenue-approved share purchase plan. This is currently subject to a maximum of €150,000.

Moving Between Bands

You will move from one contribution band to the next on 01 January of the tax year that includes your relevant birthday.

Lifetime Pension Limit

The lifetime pension limit, also known as the Standard Fund Threshold, is the maximum total benefit an individual may receive from all tax-approved pension arrangements, including the pension plans of previous employers. Currently, the lifetime limit is €2 million.
Recently, Minister for Finance Jack Chambers outlined a decision taken by the government to phase an increase in the SFT of €200,000 per year beginning in 2026 until 2029 to a total of €2.8 million.

AVC’s – Are there other advantages?

Aside from the value of the tax relief, the value of the fund you build up making AVCs and any other pension contributions is to fund a better lifestyle in retirement. The state pension is currently just under €14,500 per annum. All income funded through your pension and AVCs are going to enhance your financial wellbeing when you are ready to stop working.

And, finally

Finally, if you are an employee and do not have a lump sum to spare to invest in an AVC, you can still take advantage of the generous tax relief. AVCs can be made through your weekly or monthly payroll, and even better – the tax relief will be granted at source. In other words, it is done for you. Talk to CPAS, or your pension provider, to discuss what works for you, visit https://cpas.ie/avc for more.

About CPAS

For more details, contact Susan O’Mara via email susan@cpas.ie or phone 01 223 4949

Are workplace Pensions complicated?

Posted on 25 June 202425 June 2024 by Susan O'Mara

Pensions have been a hot topic in the media for the past few years, with many articles and discussions about the IORPII Directive and the Government Auto Enrolment Pension scheme, which is now expected to commence in January 2025. In the latest Irish Construction News magazine, SUSAN O’MARA, Business Development Manager, CPAS (CIF Pension Administration Services), explains the latest developments.

These developments should hopefully raise public awareness of the importance of pensions, but when I asked some of my friends who do not work in pensions if they were paying attention to the changes taking place, particularly around workplace pensions, most of them said “NO! – Its boring and complicated.”
Are Pensions too complicated? Perhaps, but let me try and simplify the topic!

Pension explained

The word Pension refers to the payment you get when you retire. However, it has become synonymous with the vehicle where your money is saved or “invested” to provide this payment when you retire. This adds another layer of complexity. But simply put, a pension is:
a) saving money during your working life to provide income later in life when you retire and
b) using that money as a regular income when you retire.
During your working life, i.e. the preretirement phase, you should be regularly making contributions or “investing” in a pension to provide yourself with a sufficient income in retirement. While the State Pension provides an annual income of €12,927 from age 66, for many, that amount would not be sufficient to replace earned income when they stop working.
That part is easy, do you need more than €12,927 in annual income to enjoy your retirement. If the answer is yes, you need a pension.
Here is where it gets complicated, depending on your employment status, you could be investing in an Occupational Pension Scheme, which could be either
defined contribution or defined benefit – or you could be investing in a PRSA.
Each type of pension has its own set of rules regarding who it is for, when you can retire from it how it calculates your benefits. This is where it can begin to seem overly complicated.

Workplace pensions

If you are an employee, and your employer invites you to join their pension – that will be through an occupational pension scheme. It might be Defined Benefit or the most likely offering with be Defined Contribution – but that is outside your control anyway. So do not think twice.
Join the scheme. Easy, not a complicated decision.
One of the main benefits of joining an occupational pension scheme is that your employer will likely contribute to your pension fund as well as you. This means that you can build up a bigger pot of money for your retirement than if you were saving on your own. Another benefit is that your contributions are deducted from your salary before tax, so you pay less income tax. This also reduces the impact of saving for your retirement on your take-home pay. Additionally, an occupational pension scheme may offer other features such as life cover, sick pay or income protection, or access to a range of investment options. By joining an occupational pension scheme, you are taking a crucial step towards securing your financial future and enjoying a comfortable retirement.
To simplify matters even more, when it comes to choosing how your money is invested, one of the aspects of many occupational pension schemes is the ‘default fund.’ This is the fund that your contributions are automatically invested in if you do not make an active choice among the available options. A default fund is usually designed to provide a balanced mix of investments that aim to achieve growth over the long term while reducing volatility and risk.
Typically, a default fund will have a higher proportion of equities (shares) when you are younger and gradually switch to more conservative assets such as bonds and cash as you approach retirement. This is known as a life-style strategy, and it aims to protect your pension pot from market fluctuations when you are close to retiring. Pensions can be complicated, however, if you lucky enough to be included or invited into a workplace pension, then it is simple
– Join.

ABOUT CPAS

CPAS are the specialists when it comes to pension provision and financial advice for employers and staff in the construction sector. CPAS administer the Construction Workers Pension Scheme, the Construction Executive Retirement Savings (CERS).

For more details, contact Susan O’Mara via email (susan@cpas.ie) or phone 01 223 4949.

Have you factored the government’s auto-enrolment scheme into your company’s pension strategy?

Posted on 25 April 202425 June 2024 by CPAS

The Irish government’s pension auto-enrolment scheme due to commence in January 2025. In the latest Irish Construction News magazine, SUSAN O’MARA, Business Development Manager, CPAS (CIF Pension Administration Services), emphasises the importance of employers keeping themselves informed about the latest regulations and requirements relating to pensions.

It is always a good idea for employers to stay up to date with the latest regulations and requirements regarding pensions in Ireland. One of the most important updates for construction employers is auto-enrolment, which is now entering the final stages of its introduction.

The government’s auto-enrolment scheme has been on the cards for many years, and draft legislation is finally in the Dáil. The scheme is scheduled to commence on 01 January 2025, which is later than the mid-2023 date that was originally planned. The scheme, which endeavours to ensure that everyone working in Ireland is saving for retirement, will be co-funded by employers and the state.

Contributions to the scheme will commence at a low rate and incrementally increase over the next decade. Employers will need to ensure they have staff covered within their existing pension arrangements or their staff will automatically be opted into the government’s scheme.

Via the Sectoral Employment Orders (SEO) and previous Registered Employment Agreement (REA), the construction sector has, for close to 60 years, been ahead of the curve on pensions for specified workers anyway.

PROS AND CONS OF AUTO-ENROLMENT

Employers will need to weigh up the pros and cons of implementing auto-enrolment in their business or adapting and utilising their existing occupational pension schemes. One key area for serious consideration is the tax relief system. The current system, which makes pensions very attractive, will be different within the government scheme.

Currently, tax relief is provided to pension members on their contributions at the rate they pay tax. So, if paying tax at 40%, the cost of a €100 pension contribution would be €60. Within the auto-enrolment scheme, there will be no tax relief. Instead, the state will contribute, as outlined below, along with the proposed rates.

From 2025, employees aged 23-60 earning over €20,000 who are not already enrolled in an occupational scheme will be automatically enrolled and will have to opt out if they wish to leave. Workers will have their pension savings matched on a one-for-one basis by their employer. The state will also provide a top-up of €1 for every €3 saved by the worker.

Years	Employee	Employer	State	Total
1 – 3	1.5%	1.5%	0.5%	3.5%
4 – 6	3%	3%	1%	7%
7 – 9	4.5%	4.5%	1.5%	10.5%
10+	6%	6%	2.0%	14%

*Employer contributions and the state top-up will be capped at a maximum of €80,000 of an employee’s gross salary.

There are other factors, such as retirement flexibility, investment choice and access to additional voluntary contributions (AVCs), and the salary cap, which employers should consider before making a decision for their business and their staff.

Currently, there is no clarity within the proposed framework regarding support from the auto-enrolment scheme in terms of member communications. This may yet fall on the employer. Employers with occupational pension schemes already in place may believe there will be no impact on them. However, this may not be the case. Many employers do not invite staff to become members of their pension scheme until they have completed their probationary period. Where this is the case, these staff may fall under the auto-enrolment scheme during this period. There may also be staff who have declined the option to join for whatever reason. They now, too, may be required to opt into the auto-enrolment scheme.

Now is the time for employers to act to ensure that they have sufficient time to consider the options available and to gain an understanding of the differences between their current strategy and what will be required once auto-enrolment is in force.

ABOUT CPAS

For more details, contact Susan O’Mara via email (susan@cpas.ie) or phone 01 223 4949.

How to engage your workforce with the value of a pension pot

Posted on 6 March 20248 March 2024 by Susan O'Mara

In a now annual tradition, as the CIF celebrates International Women’s Day with a view to inspiring inclusion and expanding the construction workforce. In the latest Construction Magazine, Susan O’Mara from CPAS looks at the Pension landscape for women and where Employers can add value.

Pension Coverage

The CSO regularly reports available data for Pension coverage in Ireland, with current data up to date as at Quarter 3 2022. The CSO looked at pension coverage in the State for persons aged 20 to 69 years. It found that as of Q3 2022, 68% of men were covered compared to 65% of women.

By contrast, the same survey, carried out in Q4 2005 found that 60% of men were covered versus 51% of women. Coverage has grown for both over the years, with increases in coverage for both women and men over the period.

However, despite this, research carried out by Irish Life in 2019, found that Irish women were retiring with smaller funds than men. There are several factors that contribute to this, which I have both written and spoken about in the past – however, the clear message is that pension coverage and pension adequacy are not the same thing. When you retire, will the value of your retirement fund be adequate to fund your desired lifestyle?
It is important for women (and men) to engage with their retirement planning and to think carefully about whether they are saving enough for retirement.

Employers, particularly those seeking to attract and retain staff, have an opportunity to be a part of the solution to pension adequacy. I have outlined below some key tips for employers to engage the women (and men):

Construct an occupational pension scheme that is a key part of your employee benefits package and get employees engaged from the start. Your pension offering should be part of your recruitment conversation and the finer details should be included as part of your induction process.
Ensure that your pension communications are clear and not full of “jargon”. One of the reasons employees find it hard to engage with the topic of Pensions is that the information can be focused on pension jargon and regulatory information. Developing simple and clear messaging around your pension offering and its value will greatly benefit employee engagement.
Provide pension and financial education for your employees. This can be done via regular pension scheme updates, webinars and even one-to-one sessions. Having delivered many of these types of sessions for employers, I have enjoyed my experience over the years in witnessing that “epiphany” moment when people understand not only the importance of saving for retirement but also the significant value of the employers’ contribution to their retirement outcome.

A workforce engaged with the value of their occupation pension scheme through employer efforts can lead to improved employee health and wellbeing and increase employee engagement at work, while also ensuring that when employees come to retire, they can secure a more comfortable income to live on.

CPAS are the specialists when it comes to pension provision and financial advice for employers and staff in the Construction sector.

CPAS administer the Construction Workers Pension Scheme and the Construction Executive Retirement Savings (CERS). 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.

Things to know this Pension Season

Posted on 30 October 202330 October 2024 by CPAS

As we approach Pension Season (yes, that is a real thing) Susan O’Mara from CPAS discusses what is right for you in the latest edition of Irish Building Magazine.

Typically, in Ireland, Pension Season is the run up to the Revenue deadline of 31 October, before which time you can claim back tax from the previous calendar year. As 31 October falls on a Bank Holiday this year, the deadline date has been moved forward to 27 October 2023. However, if you use Revenue’s online service (ROS), the deadline is 15 November 2023.

How does it work?

If you are a PAYE worker and a member of an occupational pension scheme or PRSA, you have the option to make an Additional Voluntary Contribution (AVC) into your pension. By doing so, you can avail of tax relief in 2023 for the contributions made in the tax year 2022.

If you are already making regular AVCs or annual AVCs, you may have scope to increase your contributions further. However, if you haven’t made any AVCs for the year 2022, you still have the option to do so before the end of October (or mid-November online).

Why would you backdate to 2022?

There are many reasons, but for example, if you have not contributed to an AVC for 2022, and you decide to do so now, you are then maximising the number of years you can claim tax relief before you retire.

How does the tax relief work?

For example, if you are paying tax on your income at 40%, then you can claim 40% tax relief on your pension contribution, i.e., your AVC.

AVC Paid into Pension Fund

€1000

Tax relief claimed back.

€400

Total Cost to you

€600

Of course €1,000 is only an example, and Revenue restrictions apply on how much you can make, based on your age and income. These are set out below.

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 employment (including BIK and the value of shares provided under a Revenue approved share purchase plan) and is currently subject to an earnings limit of €115,000.

What is the long-term benefit other than the tax relief?

Well, to be frank, you will need an income in retirement, a phase of life that could last well over 20 years, the more you invest into your pension when working, the greater the income in retirement will be.

What about the self-employed?

To avoid interest and

surcharges the self-employed will need to file their 2022 Income Tax return and pay any balance owing for 2022, while also paying a preliminary income tax for 2023. These liabilities can be offset by making a pension contribution.

Contact your pension provider to get expert help.
CPAS are the specialists when it comes to pension provision and financial advice for employers and staff in the construction sector.
CPAS administer the Construction Workers Pension Scheme and the Construction Executive Retirement Savings (CERS).

Contact Susan O’Mara via email susan@cpas.ie or phone 01 2234949.

Retirement, the beginning of a new life journey

Posted on 27 October 202324 November 2023 by CPAS

Our staff writer at CPAS explores one of the avenues. Retirees often see retirement as a destination when it is in fact a turning point to the beginning of a new life journey. In today’s world, where people are living longer, there are more opportunities than ever for retirees to enjoy life, pursue their interests, make meaningful contributions and nurture relationships.

As you prepare for retirement, it is crucial to map these key lifestyle factors:

What legacy are you building?

Planning for retirement provides an excellent means to create a legacy that lasts. It offers financial security for loved ones and is tax-efficient. Legacy building is not necessarily about leaving behind monetary assets. It can consist of passing down a family’s history, values, or heirlooms to the next generation, or it could involve drafting a will, selecting beneficiaries, or contributing to charitable causes. The important part is understanding the type of legacy the individual wishes to leave.

Do you have goals, dreams, and aspirations?

Driven retirees who set specific goals experience a renewed sense of purpose and direction. By establishing long-term objectives, individuals are encouraged to take decisive actions over an extended period. It is about developing a plan that motivates retirees to make choices, track their progress, and have something to look forward to. Reflection on the transition and envisioning the next phase of life, encompassing both financial and non-financial goals, is essential.

What is your relationship with money?

Your relationship with money profoundly affects your ability to build up wealth and savings for retirement. Unlike when they were working, retirees no longer have the luxury of time. It is therefore important to explore financial habits and attitudes that may subconsciously influence decision-making. Recognising this connection with money and addressing any barriers is critical.

Are you ready to navigate the lifestyle transition?

Retirement is a significant life journey transition. It requires retirees to find purpose in the next phase of life. This transition is often a solo journey. Financial advisors play a crucial role in helping retirees set new goals, manage their emotions, and redefine their identities. Together, they plan for a joyful and exciting transition into the post-work years.

Pit stop

If you take these factors into consideration and incorporate Additional Voluntary Contributions (AVCs), you will top up your pension savings and benefit from valuable tax relief. AVCs are a smart, tax-efficient way of saving for retirement. Relief from income tax on AVCs is allowed at a marginal rate. If you’re taxed at 40%, an AVC contribution of €100 will only cost you €60 net and €100 will be credited to your pension account. Should you be taxed at 20%, a €100 contribution will only cost you €80 net and €100 goes into your pension arrangement. Ensure a financially secure and fulfilling retirement journey; our team at CPAS will be delighted to guide you. For further information, visit https://cpas.ie/avc, or please contact us at (01) 407 1400 or by email at info@cpas.ie. For the latest updates, subscribe to our newsletter here.

Are you over 50?

Posted on 16 January 202324 November 2023 by Susan O'Mara

In the latest edition of Irish Building Magazine , Susan O’Mara of CPAS explains why now is the time to take control of your retirement planning.

If you haven’t already started saving for retirement, it’s not too late. The current tax relief available within the pension framework was designed to allow older people save more money. As you can see from the table below, from age 50 the percentage of your salary, on which tax relief is available, increases from 30% up to 40% by age 60. This is capped at an earnings limit of €115,000.

If you have already started saving and have built up some level of retirement fund, it is important to actively review your pension and take the necessary steps to optimise the financial outcomes, well in advance of your retirement age.

Do you regularly read your benefit statement?

Irrespective of the type of pension arrangement that you have, you will be receive an annual benefit statement from your pension provider. For the majority of people, the benefit statement is filed away for review at another stage. This document not only sets out the value of your pension fund on an annual basis, but also some helpful illustrations of what the value of your fund will be at your retirement date. These “future projections” should inform the actions you take now, whether it allows you to relax, knowing your fund is healthy, or try to make additional contributions.

How are your retirement savings invested?

Your benefit statement will also tell you how your money is invested and the choices you can make regarding this investment (known as your “Fund Choice”). A large proportion of people don’t deviate from their initial choice, or the default provided over the course of their working life. It is with this in mind that many pensions fund providers these days provide a “Lifestyle Strategy” built into them as a default.

A Lifestyle strategy ensures that the fund in which your retirement savings are invested in will automatically change its asset mix, on a gradual and regular basis as you move closer to your normal retirement age. Typically, these are structured to reduce the investment market risk in the run up to retirement. With many funds, the inbuilt Lifestyle strategy will take effect in the mid to late 50’s, for others it could be as early as 50. It is important to know if this applies. It is also important to know if it fits in well with your post retirement plans. Which brings me to my final point.

What to do with your money at retirement?

There are different types of pension vehicles on the market and as such, there are different ways pensions are calculated at retirement. Understanding your options will be an important factor in decisions you might have to make in advance of your retirement. If you are in a standard defined contribution company pension scheme, for example, you will have the option of taking a tax-free lump sum and using the balance to buy either an annuity or investing the balance in an Approved Retirement Fund (ARF).

Annuity versus ARF

More people than ever before are opting for the latter, but what are the differences? At a basic level, the annuity option is essentially taking the value of your retirement savings at your retirement date and giving them to a provider in return for a guaranteed income. The income that you will receive is dependent on your fund value, your age and health. In some instances, some additional bells and whistles can be added on.

On the other hand, the ARF is keeping ownership of the fund and investing it further, while drawing an income from it throughout your retirement. There are advantages to both options and choosing the one that suits you is based on a range of individual factors.

However, having at least some idea of what you plan to do is important, particularly where your investment fund choice is concerned. If you are most likely planning to invest in an ARF, you should ensure that the fund, in which your money is invested, in the run up to retirement, is not geared towards an Annuity – this is where your benefit statement comes in!

Finally, you should be aware that if you are in your 50’s, the State Pension, which forms a substantial part of post retirement income for many people in Ireland, is only available to you from age 66. If you are planning to retire earlier than that, this must be factored into your retirement plans. These small few steps can make all the difference to your income when you finally do retire.

Planning for your 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 straightforward chat to help you secure your present and your future.

The Future of Pensions

Posted on 17 September 202224 November 2023 by CPAS

In this edition of Construction Magazine, John Geraghty looks at the future of pensions.

The scientific evidence is clear and unambiguous: people are living longer and fewer babies are being born in Ireland. Science does not lie and neither (in this case), do the numbers. According to the 2021 fiscal report from the Finance Minister Pascal Donohoe, there are currently around four people of working age to support each person aged 65 and over. This number is expected to fall to just over two by 2050.The analysis highlights the need for serious policy considerations in this area.

IORP II – A brief summary

The Minister for Social Protection signed legislation on 22nd April 2021 which officially transposes the Second European Pensions Directive (known as IORP II) into national law. This action is part of the wider Road Map on Pensions Reform (2008 – 2023). The arrival of the IORP II regulations brings into force a series of wide-ranging legal requirements and governance standards. This should be of particular interest to pension scheme trustees and employer sponsoring pension schemes, either acting as trustees or paying for professional trustee services. It is hoped the new rules will ensure that trustees have the necessary powers and credentials for proper supervision of schemes – thereby protecting members and their investments.

The Pensions Authority expects all schemes to be fully compliant with all IORP II requirements by 1st January 2023. Employers and trustees should review their options and put in place an appropriate plan to become IORP II compliant in advance of the 1st January 2023 deadline.

One member pension arrangements

Ireland has a high number of one-member pension arrangements that operate under a trust system that now fall under IORP II. For many years, business owners have had the option to save for retirement using trust-based one-member pension arrangements. These gave flexibility in saving for retirement, recognising the requirements and the peaks and troughs in business. The Pensions Authority have warned that trustees of such schemes face prosecution from 1st July 2022 unless they comply with the new rules. While the introduction of IORP II has brought additional layers of security for one member pension schemes, increased regulatory costs make it prohibitive and life assurance companies have suspended accepting new one member schemes.

The introduction of IORP II has led employers to explore alternative compliant options in the marketplace such as master trusts and multi-employer schemes for providing retirement benefits and outsourcing all aspects of management and regulatory compliance. Both master trusts and multi-employer schemes have their own appointed trustees and governance is managed centrally, which removes the hefty responsibility from the employer.

JOHN GERAGHTY, QFA SIA PTP — John Geraghty, QFA SIA PTP

The nature of both arrangements allows them to be flexible and evolve, so any new regulatory and governance requirements will be managed by the scheme and its trustees. Employers retain control over their benefit structure and the level of pension contribution that applies to its own plan, while trusteeship (along with the associated governance and compliance responsibilities) is delegated to a professional trustee board.

CPAS can help navigate your company through an ever-changing pension environment. If you are concerned about your IORP II obligations and what it means for you and your organisation, please contact our dedicated team on 01 2234947 or email j.geraghty@cpas.ie

Planning for the Future

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.

Mind the (Gender) Pension Gap : Construction Magazine

Posted on 14 March 202224 November 2023 by CPAS

In the latest edition of Construction Magazine, celebrating International Women’s Day, CPAS looks at some of the challenges faced by women when it comes to pensions.

This month, the CIF hosted an in-person event celebrating International Women’s Day. As one of the speakers commented, it is not just about one single day in the calendar – it is about working to secure a better future for all. As a pension administration company, CPAS is focused on the future – specifically, the future of our Members. We help them save for life after work, enabling them to live comfortably with a stable financial footing throughout their retirement.

The current inflationary pressures will mean many people will see extra demands on their income. This coincides with also having to prepare financially for their long-term future. This future financial stability relies on retirement savings in order for it to be comfortable and secure. We understand the financial pressures people face and work with Members to help them understand the impact they can have on their future by making even the most modest of contributions to their pension savings. Each year for example, we remind our Members about the invaluable tax relief that is available by making Additional Voluntary Contributions (AVCs). This small step can make a big impact in the future. In fact, AVCs are also referred to as “rocket fuel”. AVCs allow Members to increase individual pension funds by maximising the tax relief they are entitled to on contributions. The limits on pension tax relief are broken down in specific bands based on age. So, for example, someone aged 33, can avail of tax relief on anything up to 20 per cent of their income that is contributed to their pension fund.

Not just an Irish issue

While everyone should be considering making the most of their pension savings by contributing what they can afford, global trends do show gender inequality still exists when looking at pension provision. According to research carried out before the pandemic, women in Ireland experience an income gap of 37% in retirement compared with their male counterparts.

There are many reasons for these inequities and while companies are not expected to resolve these challenges, there are things companies can do to help staff – mainly around acknowledging the challenges that exist and educating staff about the benefits of pension savings. Some of the impacts of gender inequality can be reduced by encouraging women to join the company pension scheme early and making pension contributions (no matter how small), consistently. However, this can only make a small dent against a greater societal challenges that exist. Pension gaps are created in a number of circumstances, including:

Service Gaps: There are numerous reasons why women take career leave. Statistics show that more often than not, caring in the home generally falls to women. This was amplified during the pandemic. Whether that is maternity leave, child rearing and caring for sick family members– women often take time out of the workplace and as a result, their pension savings suffer. These service gaps can also negatively impact their pension entitlements which is something that can be overlooked.
Pension Coverage: Two thirds of women in Ireland do not have private pension cover. Employers could help address this by informing staff of the benefits, helping staff understand the tax benefits of saving for their retirement and ensuring staff are maximising the generous pension schemes that employers have in place.

Why women should care more than men?

Pension savings should concern both genders equally. However, (according to HSE figures 2020), women live on average four years longer than men in Ireland (84.1 years for women versus 80.5 years for men). This means that their pension savings must last longer than those of their male counterparts. Furthermore, the number of people aged 65 years and over in Ireland has increased by 35.2% since 2009. This is more than double the EU average of 16% in the same period. This could negatively impact the ability of the State to support pension age adults with the same level of pension cover annually.

Planning for the Future

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.

Pensions: Expectations vs Reality

Posted on 27 May 20217 November 2023 by CPAS

The last 18 months has taught us a lot. We realised the importance of hand hygiene, the incredible work our medical professionals do on a daily basis and the joy in simple things like a pint in a beer garden or embracing a loved one. This pandemic has been painful and heartbreaking in parts but it has also shown how resilient we are as a nation and how integral the construction section is to our economy and our recovery.

NAVAL GAZING AND CRYSTAL BALLS

The pandemic gave us time to think and reflect – about our careers, our families and the precious moments we missed.

We are not clairvoyants, but as the economy reopens, many of us are looking to the future, some with hesitancy but for most of us, it is with a renewed sense of optimism.

Some may question our sanity discussing pensions during a pandemic. But as we try to deal with the here and now of daily life, it’s important not to lose sight of the future. In fact, pension reform was one of the main issues raised in the February 2020 election (we know, it feels like an age ago now). We were and still are concerned about our futures in retirement and providing a good standard of living for ourselves.

Regardless of your age, the size of your pension pot or your current situation – we all look to our future retirement with a sense of optimism. We imagine getting rid of the 6am wake up call, the ability to pack our bags and travel at the drop of a hat, spoiling grandkids, taking up a new hobby or finishing that project you have not had time to complete in recent years.

MAKING ENDS MEET

All those optimistic hopes and daydreams will be out of reach for many on the State pension. While we do not relish in the doom and gloom of future finances, it is important to point out that the State pension (currently just under €13,000), will only provide for living expenses. The government want to ensure retirees can afford to live but the State Pension does not guarantee discretionary spending such as holidays, creature comforts and subscriptions to your favourite sports channels. According to the latest CSO figures, 65% of us have accepted this and have additional pension cover to bolster the State pension amount.

YOU MAKE THE DIFFERENCE

Ireland has been facing into a pension timebomb for some time. While these issues are being pushed further and further out by successive governments, there are ways in which the government have helped us to protect ourselves from the potential fallout. These take the form of generous tax relief, which is available and actively encourages us all to build up retirement savings for a healthier pension amount. These measures may face restrictions in the future, but for now, they are a great way to save on tax while saving for your future.

TAKING CONTROL AND GETTING BACK ON TRACK

Setting goals and looking into the future is often the easy part – making the plan and sticking to it can be trickier! Pandemic aside, we understand that school fees, a veterinary bill or car repairs can derail the best-laid plans. With that in mind, we have outlined three straightforward starting points you might consider following to get you on the right track to a better life in retirement:

Understand the now: Knowing what you have currently in terms of assets, savings and pension pots is the first step we would advise you to take. You may have contributed to various pension pots over the years of your employment with various employers. Now is the time to track the details down and commit them to paper.
Know what you want in the future: This is not just the nice holidays and sports channels. It is important to understand your current expenses that will carry on into retirement. If you have kids, they will (hopefully) have flown the nest (so to speak), before you retire but what about those heating bills, house maintenance, and health expenditure. All these things are important to add to your plan. Knowing what you want from your retirement after that, should be easier. You may need your retirement savings to last up to 30 years after you retire so setting realistic expectations of the lifestyle you want and understanding what you need to have saved is really important.
Knowing what to do to achieve those retirement goals: Whether you are banking on a cryptocurrency pay off, hoping a land purchase returns high dividends in the future or selecting a fund for your retirement savings that you hope will make the necessary returns, it’s vital to get advice from a financial expert. When it comes to your pension, the various schemes administered by CPAS (CWPS, CIRT and CERS), can help you with your pension. For more general financial advice, we recommend Milestone Advisory. The team there can help you navigate the sometimes perilous and confusing world of finance. This way, you can rest assured, knowing your future hopes and aspirations are achievable.

Time is the most important ingredient in your plan for retirement savings. Start early and reap greater rewards (thanks to compound interest).When you know what you have, what you want and have a plan of action to help you achieve that, stick to your guns. Do not be derailed by the noise and fads. Your plan and your journey should be as unique as you are – so start today.

PENSIONS NOT PRODUCTS

CPAS is the pension scheme administrator for pensions in the construction sector. We do not look at pensions as products, but as the development of strategies, recognising your needs now and into the future. We work with our members to identify a clear vision for the future, achievable goals and then work with them to create a plan of action that they can implement today. It is about providing the right information today to help them make the most of their future.

As in life, there are many variables and changes. Planning for retirement involves forming expectations about income and expenses over the rest of your life, based on present assumptions. Our pension consultants help you cut through the complicated jargon and plan for your future in the long term.

For more information, please get in touch with our team of consultants who can provide more information (info@cpas.ie).

Sources: https://www.lawsociety.ie/gazette/top-stories/65-have-some-pension-cover-as-well-as-state-pension/

Retirement: When Work Becomes Optional

Posted on 21 February 20217 November 2023 by CPAS

In the first edition of Irish Building Magazine, we look at the year ahead and what it might hold.

This time last year, we wrote about a new decade with the start of 2020 and looked forward to what the next decade might hold. Who knew back then how drastically life would change for us? While many still face into another year of economic uncertainty in 2021, we still firmly believe that planning for your future should still include planning for your retirement.

Life in circles, not lines

Should we fall on hard times, many of us would only be able to live off our savings for a few months (some of us have had to this year). In retirement, we can look forward to living 20 to 30 years. The question is, how long will our savings sustain us? While most of us will receive a pension from the State, this will only secure a basic standard of living and that may differ to the vision of ‘living’ we have imagined.

People often view time as linear. We see it as one-dimensional and narrow, expecting everything to happen in a sequence after which a result neatly appears. By definition, linear living has an endpoint – a finish line. Retirement is not that finish line, nor is it an endpoint. In fact, it is the start of another cycle. It goes through evolving stages that change with time. This circular (as opposed to linear) living requires us to sustain it and the best place to start is a pension. Retirement should not be the end of something, but a point in your life cycle when work becomes optional and you look forward to a future of possibilities.

Your definition of ‘life’ may differ from what the State Pension Offers

The current working population makes the existing State pension possible. According to the National Risk Assessment in 2019, the share of the population aged 65 and over is projected to increase from one in eight to one in six by 2030 and the number of people aged 85 and over, is projected to almost double.

This is an acute concern for government strategists as they struggle to project a sustainable State pension into the future. Furthermore, while Ireland has a comparatively young population relative to other EU countries, it nevertheless faces the same long-term challenges as the rest of the continent with an ageing population. While we are happy to live longer lives, this does put inevitable strain on the healthcare system. As it stands, according the National Risk Register, 60% of those aged over 50 report having at least one chronic condition.

Whether you are 5, 15 or 50 years from retirement age, saving just a small proportion of your salary can help you achieve your dreams in retirement, but most of all, provide you with much needed financial stability. Every January, we look at the year ahead and try to imagine what it might hold. Due to the pandemic and subsequent uncertainty, it is hard to envisage the future, especially our retirement, which might be years away. However, that is exactly what we are asking you to do and, on a State pension alone, that future looks bleak.

The State pension is not designed to provide for your desired future. Its purpose is to ensure a basic standard of living for all retirees nationally. It does not take into account your location, your assets, any chronic health conditions or additional requirements that involve significant investment.

It pays to save

No matter how you break it down, pensions can make for complicated reading. However, the basic idea is simple. Pensions are long-term savings plans that benefit from generous tax relief on contributions (subject to Revenue limits) and grow over time to provide you with sufficient income when you decide to retire. Pensions never cost as much as you think, thanks to tax relief on contributions you make (subject to Revenue limits). For example, if you are on the higher rate of tax and contribute just €100 per week to your pension, this will cost you just €60, thanks to the tax relief you will receive.

Pensions, not products

For more information, please get in touch with our team of consultants who can provide more information (info@cpas.ie).

January: A Time to Reflect and Review

Posted on 7 January 202124 November 2023 by CPAS

In the latest edition of the Irish Building Magazine, we outlined our belief that retirement is not the end of something, but a point in your life when work becomes optional and you look forward to a future of possibilities. You can read the full article here.

105 YEARS OLD

January is the month when the internet is awash with all sorts of ‘top tips’ for saving money, maximising money, saving tax and any other goals that are linked to the New Year. However, it was an article about babies born in 2021 who are now expected to live until 105 years of age that caught our attention as pension providers. While this impressive age is something to celebrate, it struck a chord about how long our pension savings are expected to last. If you retire at 65 and live until 105, will your pension pot last for 40 years covering you through illness, home repairs, a replacement car and everything else in between?

Financial reviews are important and if 2020 proved anything, it is best to act now to protect against the unexpected. Now is the time to review your finances and look forward to a better year in 2021. For those who plan to retire in the future (i.e. all of us), we think you should start by reviewing your pension.

WHY START WITH MY PENSION?

Pensions are often one of the most valuable assets a person will ever own, so with that in mind, you should start by reviewing your annual pension statement. Even if you only read one or two sections of your statement, it should give you the majority of the information you need and will reveal whether you should be keeping things as they are or look to improve matters. These are four key actions you can take:

Complete an “Expression of Wish” form: If you die before you retirement, there could be a substantial payout through your pension scheme. This information will provide the Trustees with guidance regarding whom you would wish to receive this benefit in the event of your untimely death. Contact your pension provider for the relevant form.
Consider Charges and Fees: You may think that 100% of your contribution to your pension scheme goes into your pension pot. Not so in many cases. Where the administrative fees are not clear, it is worthwhile reading the small print. In the case of the Schemes administered by CPAS, your full contribution goes into your fund. We can afford to do this as we are a not-for-profit provider. This ensures we are 100% focused on making sure your funds are maximising their earning potential and every cent of your contribution stays in your fund, working for you.
Review Investment Choice: As you get closer to retirement age, it’s vital to consider where your pension fund money is invested and is this investment appropriate for your age and risk appetite. For example, does your fund automatically take steps to reduce your investment risk as you get closer to retirement? What happens if you plan to defer retirement for a period of years? Is this approach the right strategy for you? Are you planning to take an annuity or invest in an approved retirement fund (ARF) when you reach retirement age? There are many choices available to you and you should ensure your money is placed in the most suitable fund for your projected needs.
Additional Voluntary Contributions (AVCs): AVCs are a great way to boost your retirement savings if you are concerned about your current contribution levels. Going back to our advice about reading your benefit statement, this statement should give you an indication of the estimated income you will receive at retirement. If this is lower that you would like, then paying more to your pension account through AVCs is how you will improve this outcome. If you have money sitting in a current account or low interest bearing accounts, perhaps this is cash better spent securing your future retirement income – by investing it in your pension as an AVC. And the real clincher is that you can avail of up to 40% in tax relief on AVCs, which is particularly attractive if you are in the higher tax bracket.

A CLOSING THOUGHT FOR THE START OF THE NEW YEAR AND GOAL SETTING

When setting your financial goals, remember to be realistic. Take time to make small, achievable financial solutions you can work towards. You can’t spend what you don’t have, but maximise what you do. At a minimum, you should ascertain your end goals. Many of us will want to retire on at least 50% of our annual income and so, you must ask yourself, how much do I need to have saved at retirement age in order to achieve this level of income? Based on a current income of €48,000 and assuming you wish to retire on €24,000, (the State pension is currently €12,912), we estimate a requirement of €300,000 to bridge the gap. How much will you need? Are you are on track to achieve this goal?

PLANNING FOR THE FUTURE

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.