Updated: Sep 25, 2019
The topics of this blog are often a key concern for new business owners.
All business owners (irrespective of age) should have a plan in relation to Retirement and Pension.
This process is often overlooked by family businesses. Normally all surplus business cash flow goes into growing the business. However, once a business starts to become profitable, there are strong tax arguments to suggest business owners should look at pension investments.
This should start as early in the business cycle as possible to allow time to help grow the compound returns of pension investments. Specialist financial advisors regulated by the Central Bank, can help you put these measures in place. The key things to look for when choosing a pension and a pension advisor are:
a. the pension return (net of costs);
b. the risk/return combination of your investments; and
c. the length of time you have available to you to invest in a pension.
We do not provide pension advisory services but we can point you in the right direction if you are looking for an advisor in your area.
For illustrative purposes, we prepared a table below to review the impact of investing an annual amount of €1,000 into a pension fund for 20, 30 and 40 years. It shows the difference between funds achieving 5 per cent per annum return and those achieving 7 per cent. Costs vary between fund providers so when performing your evaluation, be clear what the return numbers after costs are from your pension provider.
The most significant benefit of a pension is that it accumulates without deduction of tax over your working life. The earlier it is implemented, the better the outcome for you.