Whether you’re an employee or self-employed, reducing your tax bill is a goal everyone shares. With the year-end tax deadline approaching, there’s one simple and effective way to do just that—by contributing to your pension.
Nick Charalambous, Financial Advisor and Managing Director of Alpha Wealth, emphasises the power of pensions as a dual benefit: they reduce your tax bill and act as a long-term savings plan with excellent returns.
“We need to change how we think about pensions,” says Nick. “People often associate pensions with distant retirement, but in reality, contributing to a pension offers an immediate 66% tax boost on this year’s tax return.”
For higher-rate taxpayers, the benefits are clear: “For every €100 you put into your pension, you get €40 back from the government. Essentially, a €100 investment only costs you €60—it’s a 66% tax advantage. It’s money for jam!” Nick explains.
But there’s an important deadline approaching. To get tax relief for this year, you need to contribute by October 31st (or November 14th if filing online through ROS). If you’re expecting a bonus you don’t immediately need, consider investing it in your pension to maximize this tax benefit. Your future self will thank you.
Currently, the State Pension pays €14,416.60 per year, but as Nick points out, there’s no guarantee this will stay the same in 20 or 30 years. “The government may raise the retirement age or reduce payments, so it’s crucial to secure your own financial future by starting a pension plan.”
Beyond tax relief, pensions offer additional advantages such as tax-free growth, where your returns compound year after year, and a 25% tax-free lump sum upon retirement. These benefits make pensions one of the smartest financial decisions you can make today to ensure a comfortable retirement tomorrow.
To learn more about setting up or managing your pension, book a financial review with Alpha Wealth at www.alphawealth.ie for trusted financial advice on tax savings, pensions, investments, and more.
