In the male dominated world of the past, retirement planning in Ireland was often thought to be something men mainly need to be concerned about. Over the decades we have made progress and job equality is closer than ever. Finally, national Governments are taking steps to acknowledge that women retire as well, and they also need to have their finances in order before finishing work.
The present system for calculating the state pension is unfair for women that have had a few years out of work to raise their family, but change is on the way and from March 2018 this anomaly will be gone for women that retire after that date
The Present System For Calculating The State Pension
Under the present system, known as averaging, the first PRSI stamp is the starting point, even if that was from a summer job as a student when you were only 16/17. Then the year the last stamp is paid gives the number of years the average is taken over. If a woman takes for instance, 20 years out of work to raise her family, that is not accounted for and the 20 years are part of the average used to calculate her pension.
This reduces greatly the average PRSI paid and consequently reduces the state pension she receives. This can amount to over 30 euros a week, which might not sound a great deal but amounts to a substantial 1600 euros every year.
This was addressed to some extent in 1994 when up to 20 non-working years were allowed to be taken out of the calculation for purposes of working out the amount of state pension. The problem with this is that it only applies to years taken out after 1994, and many women retiring now will have taken their time out before then.
In 2012, the number of contributions needed to qualify for the state pension was doubled, once again affecting anyone with a reduced average, which are mainly women. It’s estimated that almost 40,000 pensioners live on a reduced amount because of the current calculation methods.
Change Is On The Way
Although none of the final details have yet been released, the calculation method is changing to a total contribution system as from 2018. The Irish government want to make sure there are no anomalies in the new system, and part of getting it right involves going through paper records that date back to before 1984. The records were only made digital after this date.
Although the government thinks the present system is the fairest it has been to date, they will be holding public meetings to make sure all concerns and inequalities are addressed under the new way of calculating pensions for the future.
The Total Contributions Approach (TCA) will mean pensions are calculated on the amount paid, not when it was paid, and they will be backdating it for people who lost out when the 2012 changes were introduced.
A Change of Attitude For Retirement Planning Ireland For Women
A change of attitude by women for retirement planning is very much needed. According to a new survey by Standard Life, which reinforces the findings of a survey carried out a year before, women are financially less prepared for retirement than men.
The survey showed that only 36 percent of women currently invest in a pension, and the majority of those only contribute about half the amount they should for sound financial planning for their future.
Most women that do not have a pension are concerned about their financial future, but 71 percent of them said they would not know how to start a pension scheme. The females of Ireland have become more aware of the problems of retiring with no financial planning in place, largely because of the government highlighting and trying to correct the state pension unfairness towards women who took time off work.
Getting Retirement Planning Ireland Started
Some employers offer workplace pension schemes, and these are usually a good option for retirement planning Ireland. If your job does not have such as scheme you can start your own personal retirement savings account (PRSA).
The Pensions Authority gives details of how to start a pension, and has a calculator of how much needs to be saved to get the pension required. Although this is a handy tool, getting expert advice is the safest bet for retirement planning Ireland, and that is why so many people turn to Mason Wealth Management for the guidance they need.
Saving for retirement is important as people are living longer and have more active lives after they have stopped working. The current state pension of 239 euros a week will not go far if it’s the only income you have. Taking control of your retirement planning Ireland is vital, no matter what age or gender you are.
Expert Advice For The Financial Planning Of Your Retirement
Getting the right advice for your retirement planning Ireland is not something you should put off or take lightly. The later you leave it the more you will need to invest each month, and there are limits laid down in law which depend on your age and your income.
You should get in touch with the experts at Mason Wealth Management, as we have over 20 years of experience in assisting clients with all aspects of retirement and financial planning.
We will give you a realistic assessment of your situation while keeping the costs to a minimum. We offer a friendly service tailored to your specific needs. We want you to have a consistent regular income, while protecting your capital and we can provide the right pension planning and investment advice to achieve this.
For as much information as you need, or if you just want to have a chat about your circumstances, call us on 01 969 5786. If you prefer you can email us at [email protected] or complete our contact form and we will get in touch with you.
Don’t let yourself end up in the poverty trap when you finish working, lets get your financial planning sorted out today!!!