Retirement Planning: The benefits of starting early

    There has been a big focus on pensions over the course of 2022. From concern around the impact of market volatility to the Government proposals on auto-enrolment and the recent tax deadlines. But one thing remains clear it is never too late to start your retirement planning. And it is also never too early!

    It is clear that younger age groups have little interest in retirement planning. The chart below demonstrates that age is a significant motivational factor when it comes to retirement planning. Interest is low at a younger age and there is only a significant increase when an individual reaches their late forties and into their fifties. While it is not too late to start a pension at that stage, it does leave far less time to make a meaningful provision.

    The sooner you start to make a provision for your retirement, the easier it is financially for two main reasons:

    • The cost of the outlay is spread over a longer period and so the financial impact is reduced
    • Investing early and staying invested allows more time and potential for your savings to grow

    There are many reasons cited for not starting a pension earlier. These range from paying off student loans, saving to purchase a home to not considering you can afford to start or just simply not getting around to it. However, the fact is it’s never too early to start saving for retirement. Once you start working and can set aside even a small amount each month, you will be on your way to building a fund. Then as you earn more in your career, you can increase the amount you contribute.

    The key is to start. The sooner you can start to save money for the future, the more secure you’re going to feel about retirement. So, no matter what age you are or what stage of your career, it’s worth thinking about your pension. Just get in touch if you’d like to start the conversation.

    EIIS Fund Launch

    We are delighted to announce the launch of The EIIS Innovation Fund. 

    The EIIS Innovation Fund will allow investors to invest in Irish companies with excellent management teams and future growth potential while availing of up to 40% income tax relief.  

    With experience in operating EIIS/BES investments since 2005, The EIIS Innovation Fund will be managed by Quintas Wealth Management Limited (QWM) and advised by Quintas Capital Limited and Quintas Partners. The fund will be led by Quintas Capital Director, Kevin Canning. 

    Speaking on the launch, Director of Quintas Capital, Kevin Canning said, “I am delighted to be given the chance to lead The EIIS Innovation Fund. I have sourced, fundraised and managed several EIIS investments in the past and look forward to providing this service in a more structured manner. The Irish economy needs a surging SME ecosystem and EIIS investment should be the backbone of supporting young Irish SMEs. Reach out to me if you are an investor or company looking to learn more” 

    What is EIIS? 

    The Employment and Investment Incentive Scheme (EIIS) is a tax relief incentive scheme, previously the Business Expansion Scheme (BES) which provides income tax relief of up to 40% to individual investors for investments in small and medium-sized companies throughout Ireland.  

    The scheme offers one of the few remaining income tax reliefs and provides total income tax relief including: 

    • Salaries 
    • Rental income 
    • Employee share options  

    Find out more: EIIS Investor FAQs 

    EIIS Fund 

    An EIIS Fund is a professionally managed suite of EIIS investments. Investors benefit from spreading the risk of their EIIS investment across a number of companies as opposed to a direct investment in one company while still availing of income tax relief. 

    If you are interested in learning more about The EIIS Innovation Fund: Key Features Document 

    EIIS Webinar 

    We believe there is a lack of awareness and understanding of the EIIS scheme within Ireland. We would like to see the scheme used to its full potential and we are on a mission to ensure that both investors and companies benefit. 

    If you are a financial broker, investor or company looking to learn more about EIIS and our fund, we are holding a 30 minute lunchtime Zoom webinar on Friday 4th November at 1pm.  

    Sign Up: Here 

    Speaking about the launch, Anne O’Doherty, Head of Life & Pensions, Quintas Wealth Management commented “We are delighted to be able to offer this unique opportunity. This is an exciting and innovative scheme for investors which should bring benefits to both them and the companies involved.”

    If you are interested in working with The EIIS Innovation Fund, please contact: Kevin.canning@quintas.ie or EIIS@QWM.ie  

    Investor FAQ Link

     

    5 Top Questions About – Pensions


    It’s that time of year again. A lot of people are thinking about pensions to gain the benefit from the upcoming tax deadlines. But there’s been a lot of questions about pensions this year. From market volatility to auto-enrolment, it can seem like a bit of a minefield. Here, Anne O’Doherty, our Head of Life & Pensions answers the most commonly asked questions we have received and shares our view on how best to manage your pension.

    I haven’t started a pension yet, when is the right time to do this?

    Saving for retirement is extremely important. People are living longer and leading more active lives in retirement. As a result, it is more important than ever for you to think about where your income will come from when you retire. Starting a pension is one of the smartest decisions you can make. The earlier you start the better. But it is also never too late to start planning for the financial future you want. Have a look at this Pension and Retirement Calculator on our website. It can give you help with your retirement planning and to see you how much you need to put away for later in life.

    I’ve read a lot of headlines about auto-enrolment recently – what is it?

    Quite simply auto-enrolment is a new scheme announced by Government earlier this year. The aim of it is to try to encourage people to make adequate provision for their income at retirement. It will work by having employers automatically enrol their employees into a workplace pension scheme. It is aimed at those people who currently are not in a company pension scheme. The Government has estimated this number to be around 750k between the ages of 23 and 60 (earning more than €20,000). Our recent blog covered all aspects of auto-enrolment, and you can read it here.

    Is my pension safe given the current market volatility?

    We are being asked this a lot by our clients given the rocky year markets have endured. The first and most important thing to remember is that a pension is a long-term investment. By their nature markets have ups and downs but over the course of an investment these tend to level out. There are many factors that can affect the markets. Volatility is usually caused by political and economic factors, industry or sector changes or even individual company news. While it can be difficult to witness any declines in your portfolio, it is important to apply logic and not act out of emotion. The most important thing for an investor to do is hold their course. History has shown that those who have stayed invested during previous periods of market volatility have achieved their original investment objectives.

    I’m getting nearer retirement, should I make any changes to my pension arrangements?

    As a general rule you need to be between 60 and 75 years of age to take your pension benefits. If you are are about 10 years from your retirement age, then there are a few things you need to start considering. There are lots of things that you have had to think about to date – building your career, paying the mortgage, educating your children and maybe even saving for a rainy day. These are important. But as you start approaching retirement it’s now important to take advantage of the last 10 years of your working life to make sure you maximise your financial position when you do retire. This can mean increasing regular contributions, making additional lump sum contributions or switching funds to lower risk options. Depending on your own personal circumstances, we can talk you through what the best approach is now.

    What is the tax situation for my pension contributions?

    It is safe to say that a pension is one of the most tax-efficient ways of saving money. Tax relief is the greatest benefit of saving into a pension. If you’re paying tax at 20%, then you’re entitled to 20% back on pension contributions. If you’re paying tax on your salary at the highest rate, then you’re entitled to get 40% back on any pension contribution that you make. So, it doesn’t cost as much as you may have thought to save for retirement. You can also benefit from higher limits for tax relief as you get older as these are age-related.

    5 Top Questions About – Market Volatility

    It’s all over the headlines. The markets are going through a period of unprecedented volatility. It is, of course, a time that may cause worry to many investors. Here, Anne O’Doherty, our Head of Life & Pensions answer the most commonly asked questions we have received and shares our view on how investors should react.

    What is market volatility?

    Market volatility is an investment term which is used to describe periods of unpredictable and sharp price movements in the stock market. It covers when prices fall but can also refer to sudden price rises. Understanding market volatility and being aware of it is an important part of investing.

    What makes markets volatile?

    There are many factors that can affect the markets. Volatility is usually caused by political and economic factors, industry or sector changes or even individual company news.

    The current market volatility that we are experiencing is being driven by the war in Ukraine, pending interest rate increases, fears around new Coronavirus variants and sudden rise in inflation among other factors.

    What does a “bear market” mean?

    A bear market is a prolonged period of decline in the stock market, usually a decline of at least 20%. It’s an indicator of low investor confidence and a sluggish economy. A bear market is usually followed by a bull market. This is when securities are once again on the rise and tends to last longer than the preceding low. 

    What impact will this have on my investment?

    While it can be difficult to witness any declines in your portfolio, it is important to apply logic and not act out of emotion. The most important thing for an investor to do is hold their course.

    History has shown that those who have stayed invested during previous periods of market volatility have achieved their original investment objectives.

    I’m not sure what to do, where can I get help?

    Investing is a long-term commitment. A well-balanced, diversified portfolio would be built taking into account the ups and downs of the market. Although volatility is a typical part of investing, it’s not unusual to be concerned by periods of it. If you have any questions or concerns in relation to your own investment, please don’t hesitate to get in touch with us at Quintas Wealth Management.

    Why you need to have a financial plan

    Anyone who has a source of income and out-going expenses should have a structured financial plan. The objective of this is to help you achieve your financial goals. But really what it does is to help you live the life you want to live. It can be as simple as paying the mortgage off early, saving for education expenses, putting a sum aside for a “rainy day” or planning for a comfortable retirement.

    Your life is your story

    At Quintas Wealth Management, we like to think that your life story is like a book. As the pages turn, your story is told. Each chapter is a different stage of your life. At each stage, you will have different challenges, opportunities, and choices. You probably have plans in place for what you wish to achieve in each chapter. So why would you not have a plan in place to financially support these plans?

    What is financial planning?

    Financial planning is a straightforward way of creating a roadmap that will help you as you journey through your story. Creating a roadmap for your financial future is for everyone. It provides a step-by-step approach to meeting your life goals. It puts you in control of your income, expenses, and investments so you can manage your money to deliver the best outcome for you. Financial planning is an ongoing process that will reduce your stress about money. It will support your current needs and help you be prepared for what you want in the future.

    Benefits of financial planning

    1. Puts you in control

    By understanding clearly what your income and outgoings are and setting out your goals you are firmly in control. Without a plan in place, it can be hard to budget properly on a day-to-day basis, let alone plan for the future or the unexpected. A financial plan puts you in control, so you know not only where you want to get to but how you are going to get there and when.

    • Peace of mind

    A financial plan helps you manage your money efficiently. It considers many factors including your life stage and risk profile as well as your family situation. That way you can not only cover your ongoing regular expenses, but you are safe in the knowledge that future and unexpected expenses have been planned for too.

    • Cover all eventualities

    Your financial plan will be unique to you. It will incorporate the right mix of protection, investing and saving for what you want to achieve. A part of any good plan will create an emergency fund. This is a critical aspect of financial planning to ensure that your plan delivers what is right for you regardless of what happens.

    Our 4-step approach

    At Quintas Wealth Management we offer a simple 4-step approach to financial planning. This allows us to work together with you to put a robust plan in place to get you where you want to be. Our belief at Quintas is that the most constructive way of establishing a client’s financial goals and putting solutions in place to achieve them is through our financial review process. This allows us to work with you to assess where you are at in financial terms and where you are trying to get to. We consider many factors including your life stage and risk profile as well as family situation.

    We also build-in security against any unforeseen circumstances that may happen. And most importantly we review your plan regularly to make sure that it is delivering what you need and to take into account any changes you may require.

    So, if you’re ready to talk to us about your story, just get in touch.

    Pension Auto-Enrolment and Your Retirement Planning

    The Government has announced that the long-awaited Auto-Enrolment Retirement Savings scheme is set to be rolled-out from 2024. It is targeted at approximately 750,000 workers across the country. The aim is to ensure these people have made provision for their retirement if they do not have an occupational or other pension scheme in place.

    We have a lot of details on the proposed way the scheme will work but like anything there will be post-implementation issues to iron out. Anne O’Doherty, Head of Life & Pensions gives us an overview of the scheme and what we believe it means for your retirement planning.

    Anne O'Doherty, Head of Life and Pensions, Quintas Wealth Management
    Anne O’Doherty

    What is Auto-Enrolment?

    Quite simply it is a new system to try to encourage people to make adequate provision for their income at retirement. It will work by having employers automatically enrol their employees into a workplace pension scheme.

    Who is it aimed at?

    It is aimed at those people who currently are not in a company pension scheme. The Government has estimated this number to be around 750k between the ages of 23 and 60 (earning more than €20,000).

    How does it work?

    The scheme is being set up so that contributions paid by employees will be matched by their employers. This will be as a percentage of the employee’s gross income. The State will then also add a top-up to the money in the pension pot. The contribution rates are going to be phased in over a 10-year period. They will start at 1.5% for both employee and employer in 2024.

    Can I opt out?

    The scheme is opt-out rather than opt-in. This means that people who do not have another arrangement in place will not have to do anything to start paying into their pension fund.

    But employees who do not want to pay into the scheme can opt-out but only after an initial 6-month period. The opt-out is also not indefinite and they will be automatically opted-in again after 2 years.

    Will there still be a state pension?

    Yes, it has been confirmed that there will still be a state pension scheme in place. But as we know this does not function as a direct replacement for a salary. There is a short-fall – the “pension gap” which may well continue to increase due to increasing life expectancy and demographics. The idea is to bridge this gap, by auto-enrolling those that do not have an additional pension plan (company/personal/PRSA) in place into the scheme.

    Financial Market Commentaries

    The Russian invasion of Ukraine sent investment markets into freefall. For a number of weeks leading up to this we were receiving client queries regarding what the impact on their investments would be, should this happen. Now that it has, our response remains the same as events unfold.

    There is understandable concern as there always is during turbulent periods in the stockmarket. It is important to remember that these periods are part and parcel of stockmarket investing. For those invested in diversified portfolios for the medium to longer term, it is a case of let the stockmarket readjust. Historical data indicates that declines tends to be temporary.

    To assist you in understanding the impact and implications of the current situation we have included links to a number of commentaries from our investment partners. We will add to this over the coming days as the situation continues to be assessed.

    Implications of the Russian Invasion of Ukraine – New Ireland

    Possible economic and financial implications of Ukraine situation – Aviva

    Investment markets roiled by Russian invasion – Zurich

    Markets Update: Russia-Ukraine Crisis – Irish Life Investment Managers

    Navigating geopolitical events – Dimensional

    Trade & Economic Impacts of Ukraine invasion – IBEC

    First reaction to the Ukraine crisis – Davy

    Which is better Serious Illness cover or Income Protection?

    There is no single right answer to this question. As with many areas of financial planning, it depends on your own individual circumstances. What is your occupation, your financial situation, your life stage and what are your financial goals? You need to understand some key differences between Income Protection and Serious Illness.

    The main difference is that Serious Illness cover pays a once off lump sum when you claim. Whereas Income Protection pays a regular income. There are a number of other differences as well. To help you understand these better, we have highlighted the main ones below.

    What's the difference between Serious Illness and Income Protection?

    The Finance Act 2021 is now law – what does this mean for your retirement?

    The Finance Act 2021 was signed into law at the end of last year. There are a number of important changes for consumers brought about by this. We’ve received several questions specifically in relation to retirement options from our clients and have summarised the new position below.

    For many years, at retirement you may have had the option to transfer some or all of your retirement fund to an Approved Minimum Retirement Fund (AMRF) or an Approved Retirement Fund (ARF). These are post-retirement investment plans. They allowed you to continue to invest your pension fund in retirement and draw down money as you need it, rather than buying an annuity.

    The is one main difference between the two options. This is if you were under 75, you could not transfer to an ARF unless you could demonstrate a guaranteed income of €12,700 a year (including State pensions). If you were unable to meet this minimum, you had to do one of two things. Either transfer €63,500 to an Approved Minimum Retirement Fund (AMRF) or purchase an annuity. Bringing up your level of guaranteed income to the minimum amount.

    This specified income requirement has now been removed.

    In effect, this means that there is no longer a need to have an AMRF product available. The entire pension fund can be transferred into an ARF with no limits to the amount drawn down every year. There are specific rules associated with ARFs in relation to drawing down money and the tax implications of this.

    What are the choices now?

    There are now two specific choices when it comes to your retirement options. You can invest in an annuity or investing in an ARF. Different criteria apply to both options and your pension must meet certain eligibility requirements.

    What happens to my existing AMRF?

    Where you already made a decision in relation to your retirement funds you may have an AMRF. If that is the case then this will automatically be converted to an ARF. Your product provider will be in contact with you to confirm the new arrangements.

    Having spend time and effort to build your pension, how to use that to fund your retirement is an important decision. There is no single right way. You need to assess the options available and your own financial needs.

    We are happy to help if you have any further questions in relation to this important change or need guidance on your options as retirement approaches. Just get in touch for a chat.

    How to make the most of your pension with maximum funding

    The focus on pensions for the self-employed with the tax deadline has passed for another year. But that doesn’t mean that the conversation around pensions should stop. Many companies offer occupational pension schemes with regular contributions. But the majority of people do not benefit from the savings they can make by maximum funding their pension.

    An occupational pension scheme is one of the most tax efficient ways of providing pension benefits for company directors and employees.

    Employers get tax relief on any contributions they make to a pension arrangement. Employer contributions to pension arrangements are fully deductible for corporation tax purposes up to certain limits. The treatment of employer contributions for tax purposes depends on the type of arrangement you may have.

    Any contributions paid by employers to occupational pension schemes are not treated as a benefit-in-kind. These can be paid in addition to the contribution limits for employee contributions.

    Getting to know your allowable maximum annual contribution will help you with retirement planning as well as saving you money.

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