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Dublin: 13 °C Wednesday 16 October, 2019

Survey finds the majority of people are unaware of pension tax breaks

A survey for Standard Life found that the average adult has a pension of about €4,000 per annum to live on.

A RECENT SURVEY of over 1000 people showed that 64 per cent of respondents either don’t know or don’t think pensions are tax efficient.

The online survey was conducted by Research Plus Ltd on behalf of Standard Life and found that the the average adult has a pension of about €4,000 per annum to live on.

Tax relief on contributions

In recent years, the rules governing personal pensions have changed considerably. If you save for a pension, tax relief is available on that pension, but that amount is determined by your age. This relief is more generous as you get older. Results from the survey showed that the average respondent’s pension pot was €86,000.

“It’s important that consumers realise pensions are probably the most valuable tax break available to them,” said Aileen Power, consumer spokeswoman for Standard Life.

Using the example of a €285,000 pension, up to 25 per cent or €71,250 can be taken out as a tax-free lump sum from a defined contribution pension saver on retirement, she said.

“The other advantage of having a pension when you retire is tax-free cash. Pensions are very good value for money and make a lot of sense,” said Power. “Having received a drubbing in the past few years, pensions are back – with valuable tax relief, strong investment performance, tax free cash, they represent good value for money,” she said.

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