advice sought on setting up a directors pension

U

updadubs

Registered User
Messages
54
Hi all, just wondering if anyone has any advice or recommendations for a directors pension.
I recently setup an it contracting company and would be looking ro reduce my tax liability, but at 41, would be mindful of retirement provisioning.
I will seek financial advice but wad interested in opinions of others on this forum.
 
Hi updadubs

Are you self employed or a director? The reason I ask is if you are looking to reduce your personal tax liability, it is a personal pension.

If you have a limited company and want to reduce your company tax, it is a company paid pension.

That needs to be established in calculating how much can go into the pension and what particular form needs to be filled out. Then you get to the investment bit!

What is your risk tolerance?
What is the investment term?
What are you trying to achieve?
If the worst possible scenario happens, will your future lifestyle be significantly altered?
Are any trade-off required?

When those questions are answered, you can have a look at implementing a diversified investment portfolio to suit your needs. Not everything will go up or down at the same time, it is about managing your risk and expectation.


Steven
www.bluewaterfp.ie
 
Thanks for replying SBarrett..
Im a director of a limited company of which I am the sole employee, basically an it contractor.. so id say it will be a company pension..
At 41 I will most likely be working for next 25 years + and at this stage am not risk averse ..
I was hoping to hear peoples experiences and look to set one up myself..
The main reasons would be to :
Save tax
Provide for future (25 years from now)
Not get fleeced in setting pension up.
Have 50/50 attitude to risk and safety.
 
It will be a company pension then.

You can make once off contributions or regular contributions. The Revenue have limits on the amount that can be invested but most aren't effected by that.

In order to provide for the future, you need to have a think about what you want that future to look like. You can then work out what you need to do to achieve it, even if you can't afford it at present. Most people just put in what they can, see what comes out at the end and their retirement is based around that.

Returns wise, it depends on how long you go back. The MSCI World Index returned 14.97% per annum in the last 5 years. Bring that back over 10 years and it's 6.96%.

The falls have a greater impact on the value of your fund though. Take two funds, fund A grows by 10% per annum for 10 years. Fund B grows by 20% for 7 years and fall by 20% for 3 years (the order of the rise and falls is irrelevant). Fund A will outperform Fund B by 42%.

That is why you need a diversified portfolio; something to dampen those falls when they happen.


Steven
www.bluewaterfp.ie
 
You must log in or register to reply here.
Back
Top