You’ve heard of doctors differing and patients dying? Well, the financial equivalent is a pensions consultant inadvertently killing your retirement fund.
Pensions in Ireland are notoriously complex and even some of the more proficient advisers struggle with the rules. Using the wrong product can cost you your tax relief, thwart your retirement goals and could even deny your dependants benefits in the event of your death.
Reviewing your pension structure and benefits simply ensures that your arrangements are fit for purpose. A review will ensure that you’re in the right product, contributing the right amount and invested in the right solution at the right price.
But it’s not just the review that’s important, it’s the timing of it that’s critical. That’s because the real value rests in the management that can be done specific to your own circumstances.
As a general rule, if there is an event that impacts on your employment, then that’s the time to seek pension advice. If you get a job, move job, get a bonus, get made redundant, get sick, get married or get to retirement, then you need to talk to an expert who can alert you to all the opportunities – or risks - linked to that event.
Periodic pension reviews can uncover cost inefficiencies for owners, high charges for employees, compliance issues and investment underperformance. A good review will also measure against other schemes to see if additional benefits should be included in the package. One cost-effective and important benefit is a death in service scheme, which is an approved pension scheme without any pension contributions – the company is merely providing employees with a protection benefit (life assurance). Another is disability and/or illness coverage.
The cohort of individuals who can benefit from an adviser’s expertise the most are proprietary directors. The journey from the establishment of the business to the eventual exit will necessitate high-calibre expertise to fully optimise the pension opportunities available to business owners. A review in these instances will marry the corporate and personal agendas of the key stakeholders: funding during service, protecting incomes and efficiently managing the exit will all feature prominently in the evaluation.