Occupational Pension

Occupational pension schemes are set up by employers to provide pensions for their employees. There are two main types of occupational pensions:

Defined Contribution Schemes

With a Defined Contribution (DC) scheme the money you pay into the scheme is invested with the aim of giving you an amount of money when you retire. Your final pension is based on the amount of money paid in and how the investments have performed. You will usually pay a percentage of your wages into the scheme, and your employer will also contribute.

If your employer does not provide you with access to an occupational pension scheme or if certain restrictions apply to their scheme, they must facilitate access to a standard PRSA.

Defined Benefit Schemes

With a Defined Benefit (DB) scheme, your pension is based on your pay/salary at retirement or the average salary held while you were a scheme member and the number of years you have been in the scheme. Your pension entitlement doesn’t depend on the performance of the various funds the money was invested in over the life of the pension.

Generally, you pay a set percentage of your salary into your pension fund, and your employer pays the rest. DB scheme benefits are not guaranteed. If the scheme’s funds are insufficient to pay the benefits, and your employer is not able to meet the shortfall, promised benefits may have to be reduced. DB schemes are becoming less common, and few employers offer them.

How to boost your pension

When reviewing your pension, you may look at ways you can boost your pension fund to increase your benefits at retirement.

To do this, you may choose to make Additional Voluntary Contributions (AVCs). AVCs are extra contributions you may be able to make to an occupational pension scheme in the private or public sector.

You can only make AVCs to your employer’s occupational pension scheme if the rules of that particular pension scheme allow AVCs. If that is not the case, then your employer must offer you access to a standard Personal Retirement Savings Account (PRSA) to enable you to make additional contributions.

If your employer allows you to make AVCs through their occupational pension scheme, you are not obliged to use this scheme to make additional contributions to your pension. You can choose to take out your own PRSA and make the additional payments in it.

More information can be found on the Pensions Authority of Ireland’s website.

Your options at retirement

How to receive your pension, and what can you do with the money once you retire? You will have several options available, including:

Taking a tax-free lump sum
Receiving an annuity
Transferring some or all of your pension fund to an Approved Retirement Fund (ARF)
Taking a taxable lump sum

More information on your options at retirement can be found on the Pensions Authority of Ireland’s website.

More information on your options at retirement can be found on the Pensions Authority of Ireland’s website.