When it comes to Munster talent and entrepreneurship, our food, agriculture and tourism can be the first industries that come to mind. However, the province also has a thriving financial sector and, over the next few weeks, I’ll be getting advice from local professionals on how to best get our finances in order.
This week, John O’Driscoll of Skibbereen-based Blueprint Financial Planning wants to highlight the importance of pension planning. A new study by Cork by his company has found over 45% of adults surveyed have not taken out a private pension. Mr O’Driscoll explains why this is a major problem.
“Within 20 years, the number of pensioners in Ireland will be close to 1.5 million, and our state system will struggle to cope,” he says.
Irish people have long put off talking about private pensions, and this survey is a wake-up call that we need to collectively have that conversation
I put it to Mr O’Driscoll that families with young children, who are paying massive amounts on mortgage/ rent and childcare,saving for a pension feels like a luxury that they can leave on the back burner for a few years.
“Most people know that when it comes to pensions, it is best to start contributing as early as possible,” he says.
“However, in practice and at different stages of your life there will be competing priorities for your hard- earned money, such as mortgages, childcare, cost of a college education or perhaps the care of elderly parents,” he says.
He says facing up to it can be the trickiest part and many are surprised by how much of the cost can be offset.
“Our clients tell us that once they commit to a pension contribution, they feel a sense of relief,” he says. “Once an experienced pensions advisor such as ourselves explains the process and the benefits, most younger people realise the importance of saving for their futures with a pension plan.
“Most clients are actually surprised the actual cost to them is much lower than they thought due to the impact of tax relief. Those who put off saving until they feel they can better afford it are putting even more stress on their future selves to pay in larger amounts to make up for the years in which they didn’t save.” Mr O’Driscoll also sees people who have been missing out on extra funding from their employers without realising it.
“Many employees have access to a pension scheme through their employer, and they may be missing out on employer contributions to the plan as they have opted not to join the scheme themselves,” he says.
“This is my number one piece of advice to employees in a company where there is a pension plan in place. Pay in as much as you can to benefit from the full matching employer contribution.
“For employees who are not as lucky to benefit from a company pension scheme and thus a company contribution, there are still ways to pay to a pension through your payroll and receive all of your tax relief at source. For self-employed and others, an impartial pensions expert will guide you through the options available to set up your own pension plan.”
He is aware that people feel overwhelmed by the perceived complexity of pension planning and says that is where professional help comes in.
“A good financial planner will cut through the jargon for you, will be familiar with all types of pensions, savings plans, protection and investments across the market. The major life assurance companies are providing retirement resources online for people to calculate what their pension fund would be worth at retirement if they were to contribute ‘x’ over ‘y’ years for example.
"People can play around with these figures and it’s great to give people a tangible and realistic goal to aim for. It gives them a taste of what they need to do to obtain a desired ‘pot’ at retirement. However, we find there is no substitute for face-to-face advice where you really get to know people, their goals and aspirations.”
Deal of the Week
The desire to reduce our use of plastic and buy products that have been made in an ecologically sound way is changing the way many of us think about shopping. While price is still a key concern, we are also looking for items that will last and, if possible, are made in our local area.
With Christmas on the horizon, Munster shoppers looking for gifts that tick the above boxes will find a treasure trove of products at www.corkcraftanddesign.com. Cork Craft and Design is a voluntary organisation rub by its members, and representing professional craftmakers in Cork city and county.
The organisation prides itself as being a centre of excellence, bringing together the very best of Cork’s craft and art work. From small items like candles, soaps and beautiful papercraft to furniture that is designed to become a family heirloom, shoppers will find it all on the website and in their exhibition space and shop in St Patrick’s Woollen Mill, Douglas, Cork.