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1. PENSIONS IN CONTEXT
1.1 Evaluating Pension Requirements
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Retirement generally means that earned income ceases, which in
turn will more than often produce a reduction in overall income.
Whether this affects the client's standard of living will depend
on the level of income from other sources, which in turn will depend
on previous planning and, perhaps, inheritances.
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Few people retire on Revenue permitted maximum pension benefits,
whether from an occupation pension source, or personal pension source.
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State Earnings Related Pensions are calculated only by reference
to earnings in a particular band of earnings, and only by reference
to a maximum number of years. The result of this method of calculation
is that once earnings exceed a certain amount no further earnings
related pension is awarded.
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The combination of the above points could lead to an uncomfortable
retirement through insufficient income.
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Long-term planning should aim to bridge the gap between pre-retirement
income and the required level of income in retirement. Bearing in
mind that the maximum from an occupational scheme will be no more
that 2/3rds of pre-retirement earnings, some careful planning will
be required if it is decided that post retirement income should
be equal to or exceed working income.
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Minimum pension requirement will be based on total regular expenditure
plus any need to build reserves, plus allowances for care in old
age and inflation
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