This working life: Time out of work means money out of your pension
​Job sharing, unpaid parental leave and reduced hours may be attractive ways to improve work-life balance, but they must be considered when planning for retirement

• CLAIRE HANRAHAN
• NOVEMBER 26, 2022

“You can’t get the time back.” This is what I say to my clients, and indeed my friends, when they are considering reducing their hours of work when they have children.
Since the start of the pandemic, we have seen our clients prioritise what’s important to them in terms of work-life balance. They want the option of working from home and not sitting in traffic feeling stressed.
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Employers are offering more and more flexibility to their employees in the form of job-share, reduced working week, unpaid parental leave and indeed, term-time. If you can financially afford to do this, it can be a benefit well worth taking advantage of.
However, there is a catch if you don’t allow for this when planning for retirement. Any time you take off while working impacts your service. For example, if you are working a four-day week for five years, you will lose one year of service.
Work half-time for ten years? That ten years’ service is now reduced to five, and that will reduce your pension unless you take action.
According to the National Women’s Council, even though over 50 per cent of women are now active in the labour force, they are far less likely to have pensions than men – and the pensions they do have are likely to be lower in value.
A trend our financial planners have noticed lately is more and more fathers availing of flexible working conditions, which is very encouraging. But what should working parents/potential job-sharers do if they have a feeling their reduced working hours are going to have an impact on their pension? Here are some tips.

Plan before you have a family The earlier you take action around your pension, the better. For every four years you delay paying into a pension, it will double the cost of building up your target fund.
When I meet young professional clients in their 20s I often advise them to start building up an extra pension in advance of buying a house, getting a mortgage and indeed having their family.
You can really break the back of what you will need to bridge any future gaps when you have relatively few commitments and outgoings. When you have lots of financial commitments in your 30s like mortgages and childcare, paying extra money for a pension might not always be an option.
Clients are often amazed that they have managed to build up an extra €30,000 in a relatively pain-free fashion during their 20s. This can give them plenty of flexibility and options when it comes to reducing hours in the future.
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Make an additional voluntary contribution (AVC) To compensate for years missed towards your pension, you can opt to pay more into an AVC scheme at any stage in your career, provided you already have an occupational pension scheme with your employer.
The great thing is that the government helps pay for it. If you are in the high rate of tax, putting €100 into your pension will cost you only €60 and the tax man picks up the rest of the bill. AVCs are flexible, so you can pay as much or as little as you want within limits, and you can take breaks if you need to.

The devil is in the detail Be sure your financial planner does a risk questionnaire with you and puts you in a pension fund that suits your appetite for risk.
All pensions vehicles have charges. Insist that your planner explain them to you in a clear and transparent fashion, and that you are comfortable with them.
While the tax relief is very favourable at present, it may not always be the case. So make hay while the sun shines and don’t lose out on your year-on-year entitlements.
Pensions don’t die with you. And while we always hope you enjoy a long and healthy retirement, if – god forbid – you don’t make it, your pot is transferred to your estate.

Review your plan We love to see our clients thinking about their goals for the future, and putting plans in place to achieve these. However, you need to review these plans, as things can and will change. We recommend a review every 12 to 18 months for those under 50.

Once you are on the home stretch towards retirement, review at least every 12 months. As you get older and your salary increases, you can pay more in as per Revenue rules. You will also need to see where your money is invested, as most clients like their plan to de-risk as they approach retirement age.

They key message is to sit down with a financial planner with all the above in mind and see firstly if you need to do anything for your retirement – and if so, what your options are.
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Claire Hanrahan is CEO of Irish Pensions & Finance, ipf.ie
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Featured in the Sunday Business Post 27/11/2022 
www.businesspost.ie/analysis-opinion/this-working-life-time-out-of-work-means-money-out-of-your-pension/

​​Claire, who holds a BA in International Business and an MBS in Marketing, will lead IPF’s team of 38 financial advisers at the company’s headquarters in Clonee, Co. Meath. She will be supported by a newly established senior management team including Carol Crahan, who takes over the role of Chief Operations Office and Blaithin Finn, Chief Financial Officer.
 
“I’m really looking forward to taking on this role, particularly at this very interesting time in the industry with the recent changes to the state pension regime. I’m hugely grateful to Owen and the wider managerial team for their support and guidance during my years with IPF. I’m committed to continuing the policy of growing and nurturing our fantastic team of advisers as they guide our clients through these important financial decisions. I’m excited to take IPF through this next chapter.”
 
We wish Claire the best of luck in her role and look forward to working with her in the future.

It has now been 6 months since we launched our Service Centre, a dedicated phone line service which gives clients the opportunity to have their queries answered instantly by a Financial Advisor. No need for an appointment and no irritating hold music!

Over the duration of this 6 months, our Advisors have taken over 1,000 calls from clients with varying queries in relation to their financial plans.

Some of the most common queries we've had are;

• How is my pension / investment fund performing?
• Can I amend my plan?
• Can I book a Financial Review for myself and my spouse?
• How do I make a claim on my policy?
• My circumstances have changed, is my plan still adequate?

To discuss your Financial Plan with a Qualified Financial Advisor, you can call our Service Centre, Monday-Friday 09:00 - 17:30 on 01 8298500. We look forward to hearing from you.

Irish Pensions and Finance staff took on the Garda AFC recently in a football match in aid of St Michaels House in Westmanstown Sports Centre. 

The IPF lads put up a brave fight but were outrun in the end by the impressive Gardai! 

A great evening was had by all though with some great support from the sidelines! Looking forward to next year already!

James Burke, Anthony Dwyer and Grace Doyle from St Michaels House, presented with donation by Owen Dwyer, IPF, Patrick McElroy from An Garda Siochana and Neil McGroarty, IPF

​Irish people are living longer in retirement, but how can you make sure your finances reflect that?​

There is no reason why any of us should approach retirement with anything other than a positive outlook. The average life expectancy in Ireland has risen from 69.8 in 1960 to 82.3 in 2019*, meaning most of us will live longer and healthier lives in retirement. But for many retirement can be a gloomy prospect full of financial worries, not to mention the fear of ill-health or death. No matter what your personal outlook or financial position you can improve your retirement by taking some simple steps:

1. Plan. Decide what it is you want to do when you are retired. How much money will this cost and how much time will you need? The more detail you have the easier it will be for you to allocate your two greatest resources, time and money. Discuss with your partner to ensure they’re on board.
2. Assess your finances. Have a clear idea of the value of all of your assets, including pensions past and present. Balance against your plans above and allocate accordingly. A good financial adviser can help you gather and interpret this information. 
3. Take advice. You can lose or gain a great deal of money through good/bad financial planning. Find an adviser you trust and work with them to design the very best financial plan for your particular situation. It may cost you money but will be well worth it in the end.
4. Use buckets. You will have short, medium and long-term needs once you retire. Have short, medium, long-term buckets for your money – match investment risk to each bucket. For example, accessibility is more important than investment return for your short-term bucket, which makes a deposit account in the bank ideal. For your medium and long-term buckets, it makes sense to take on some risk as you will not need to access this money and can afford the time to both accumulate interest and recover from any potential dips in market performance. Buckets can be ‘tipped in’ to each other depending on good/poor investment return.
5. Look after yourself. Make sure you understand your spouse’s pension/financial position. You may be left with a stressful mess to sort out otherwise, should they predecease you. Also, think about life cover on your spouse/partner so that you will receive a lump sum payout to help you through a difficult period. A ‘joint-life first death’ plan is ideal for protecting both partners in this regard and reasonably priced.  

* https://data.worldbank.org