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Why Do Self-Employed Individuals Need a Pension?
Being self-employed comes with its own set of financial challenges, including irregular income and lack of access to workplace pension schemes. Despite these hurdles, it’s crucial to prioritise retirement planning.
The State Pension (Contributory) provides a weekly payment upon reaching 66 years of age, given sufficient social insurance contributions. However, the current maximum rate is only €277.30 per week, which may not suffice to maintain your lifestyle post-retirement. Furthermore, the qualifying age is set to increase in the coming years.
Setting up a personal pension scheme can supplement your State Pension, ensuring a comfortable retirement. Additionally, you can avail tax relief on your pension contributions, subject to certain limits based on your age and income. For instance, if you’re under 30, you can get tax relief on up to 15% of your net relevant earnings. If you’re 60 or over, this increases to 40%, meaning you can save up to €40 in tax for every €100 contributed to your pension.
Start planning for your retirement today and secure your future. We’re here to help you every step of the way.
Your Path to Personal and Company Pensions
Personal Retirement Savings Account (PRSA)
A flexible, portable scheme allowing regular or lump sum contributions. Suitable for those seeking a simple pension option or having multiple income sources.
Personal Pension Plan (PPP)
A custom scheme set up by an insurance company or broker. Ideal for those wanting more control over their pension investments or aiming to maximise their tax relief.
At Greenway Financial Advisors, we can help you in comparing these pension schemes, and find the one that best suits your circumstances and preferences. We can also help you set up and manage your pension scheme, and review it regularly to ensure that it is performing well and meeting your expectations.
Claiming Benefits as a Self-Employed Individual
As a Self-Employed Individual, you pay Class S PRSI. Class S PRSI provides cover for some, but not all benefits from the Department of Social Protection, based on their social insurance contributions and circumstances. These benefits include:
State Pension Contributory
A weekly payment for those aged 66 or above with sufficient Class S social insurance contributions.
The current maximum rate is €277.30 per week.
Invalidity Pension
A weekly payment for those permanently incapable of work due to long-term illness or disability, with enough Class S social insurance contributions.
The current personal rate is €237.50 per week.
Treatment Benefit
Provides dental, optical, and aural services to those with enough Class S social insurance contributions.
Benefits include free annual dental examination, biennial eye examination, and quadrennial hearing test and hearing aid grant.
At Greenway Financial Advisors, we can help you check your eligibility and apply for these benefits, as well as advise you on how they may affect your pension and tax situation.
How to protect yourself as a self-employed person?
As a self-employed person, you may face some risks and challenges that are not covered by your pension or benefits. For example, you may experience a loss of income due to illness, injury, or business interruption. Dependents relying on your income may also be at risk. Therefore, it is important to protect yourself and your family from these potential scenarios, by taking out appropriate insurance policies. Some of the insurance policies that you may consider are:
Income Protection
Provides regular income if you’re unable to work due to illness or injury until recovery or retirement.
You can customise the income amount, duration, and waiting period, and claim tax relief on premiums within limits.
Serious Illness Cover
Offers a lump sum upon diagnosis of a specified serious illness. The lump sum can be used for medical expenses, living costs, etc. You can choose the cover amount, term, and covered illnesses.
Life Insurance
Pays a lump sum to beneficiaries upon your death during the policy term. You can select the cover amount, term, and policy type. Life insurance can also cover any inheritance tax liability for your beneficiaries.
Business Protection
Shields your business from financial impact due to the loss of a key person, partner, or shareholder from death or serious illness. The policy can cover recruitment and training costs, business loan repayment, or business share purchase.
We’re always here to help you assess your insurance needs, find the best policies for you and your business, and review and update your policies as your circumstances evolve.
Book a Free 1:1 Initial Consultation
Let’s get on a call to discuss your personal and business finances with our experienced financial planners!
Frequently Asked Questions
What is a self-employed pension?
A self-employed pension is a privately owned pension product offered by financial institutions. It’s in your name and there’s no employer contribution.
What is a Personal Pension Plan?
A Personal Pension Plan is a product that both you can contribute to and receive tax relief on at your marginal rate of 20 or 40%.
Do self-employed individuals have access to the State Pension in Ireland?
Yes, self-employed individuals do have access to the State Pension. However, without a private pension in place, the State Pension alone may not be enough to meet your income needs in retirement.
What is a PRSA / Personal Retirement Savings Account?
A PRSA is an off-the-shelf pension option suitable for self-employed individuals who want to pay into a pension. PRSA’s can be started and stopped at any time and allow once-off or regular monthly contributions.
What is a Self-Administered Pension Scheme (SAPS)?
With a self-directed pension, you decide what your pension is invested in. The charges on self-directed pensions are typically higher than on regular PPP’s or PRSA’s.
How much do you need to contribute to a pension?
This depends on how much you need or want in terms of income in retirement.
Why start a pension?
Apart from planning for your retirement, a pension plan offers tax relief, the opportunity for growth of funds, and access to a lump sum tax-free amount at retirement age.
Discover the Best Pension Options for Self Employed People in Ireland
If you are ready to take the next step towards securing your retirement income and protecting yourself as a self-employed person, we are here to help.
At Greenway Financial Advisors, we offer a free initial consultation, where we will discuss your goals, needs, and preferences, and provide you with a personalised pension and protection plan. We will also guide you through the process of setting up and managing your pension and insurance policies, and provide you with ongoing support and advice.
To book your free consultation, simply fill out the form, or give us a call. We look forward to hearing from you and helping you achieve your financial goals.
Our Pension & Protection Partners
- Warning: Past performance is not a reliable guide to future performance.
- Warning: This product may be affected by changes in currency exchange rates.
- Warning: The value of your investment may go down as well as up.
- Warning: If you invest in this product you may lose some or all of the money you invest.
Greenway Financial Advisors Limited is regulated by the Central Bank of Ireland. Registered No. C168372