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Pensions – it really is a case of Fail to Prepare…

Something we are told from a very young age is that it is never too early to start planning for the future. As true as this may be it is something that falls largely on deaf young ears as we move on with our lives without thinking about that distant future of our elders. As you progress in your working life, this statement becomes increasingly true as no matter what stage of your career you are currently at, it is vital to plan for a future in which you will no longer be earning.

Recent reports show that the majority or workers are not saving towards a pension for their futures. As we have discussed previously, the cost of living, renting and buying property continues to grow so it should come as no surprise that many workers find themselves unable to set aside money for distant days ahead as wallets get increasingly light. There has been a lot of speculation recently that we may be heading towards a time-bomb in terms of pensions, so the news that only 47% of workers are contributing to a pension only compounds this fear and places the future of the State pension in question.

There have been discussions that the Government is to roll out a mandatory scheme for pensions by 2022, but this still leaves a period of 3 years during which workers could take matters into their own hands and begin making contributions. Perhaps unsurprisingly, it appears that the worst uptake in pension contributions is among younger workers, who again are most likely to be stuck in the rental trap at present. Social Policy Officer with The Irish Congress of Trade Unions, Laura Bambrick has said that too little is being done to encourage lower- and middle-income workers to contribute.

“Tax relief has failed as a policy instrument for encouraging low and middle-income earners to save enough towards a financially secure retirement, and there is no legal obligation on an employer to provide or contribute to a pension scheme for employees.”

Funding issues for State Pensions are likely to become an increasing concern for the future if pension contributions don’t soon become a standard, and with many employers also not making any contributions for their employees, something likely must change and urgently.

If you are interested in beginning your own pensions journey, here are some tips from us.

Calculate:

As with any budgeting system, it is essential to first work out how much you need to be setting aside. There are a great many online calculators that can assist with this. It is also important to consider your own currently monthly budget.

Shop Around:

There are so many options to choose from that this can be daunting but take the opportunity to speak to some advisers and ensure that you find the right pension plan for you.

Speak with your Employer:

It is possible that your employer may be willing to match your contributions or make some contribution for you, it is important to find out if this is a possibility in your company.

Tax:

If there are tax breaks available, be sure to make use of them.

Save:

There are many small ways to make weekly savings, implementing these may mean that your pension contributions do not leave such a gaping hole in your pocket.

Should you have any concerns or queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Changes that could negatively impact your Pension

Fail to Prepare?

If the economic climate of the last decade has taught us all anything, it is that it is never too early to start planning ahead for the future of you, your family, and your business. Often we forget that when the time comes for our retirement from the business world, State Pensions may not offer us the lifestyle we wish to have during the Golden Years of our lives. As such, it is always advised to begin looking into pension options as early in your working career as possible to begin saving for your own future and that of your family. We have spoken in the past about preparing your business for your departure, but preparation of the self can often be overlooked.

A recent report by leading pension actuaries Tony Gilhawley and Roma Burke has found that when it comes to State Pensions and the tax reliefs on same, public servants are the primary individuals who benefit from these reliefs. It is suggested that any movement to reduce tax reliefs may encourage Government workers to seek pay increases which could have consequences in many areas.

According to the report, the State’s contribution to the pension of public servants is on average just under 30%, or 53% for Gardai. This of course applies only to public sector workers engaged in employment before 2013. This is in stark contrast to the average private sector worker who will receive an employer contribution of as little as 7%, if they receive any employer contributions to their pension at all. The leading actuaries even went as far as to state:

“If you want to retire on a good secure pension, don’t work in the private sector. Join the public service.”

Suggesting that the current pensions system in Ireland is somewhat discriminatory against workers in the private sector. The report also suggests that there are incredibly few employers in the private sector willing to make decent contributions to the future pensions of their employees. Whether or not this discrimination is the case, or whether your own company chooses to contribute to your pension it is wise to begin looking into your options and begin making plans for your extended future beyond the working world.

Should you have any queries on any business or personal financial matters, please don’t hesitate to get in touch with us here at EcovisDCA, where we are always happy to help.

Remembering the Importance of Saving

Don’t Break the (Piggy) Bank

As January gets into full swing and we all settle back into the daily grind of working life, some of our New Year resolutions may be left behind or pushed aside in favour of those resolutions promising more longevity or better return of investment. High on people’s lists of resolutions is often the vow to save more money in the coming year. Whilst the increasing cost of living might make this quite a difficult task, it is often one of the most rewarding resolutions as the results can be clear to see. We have spoken recently about some of our top tips for saving in the New Year, and it seems like you will not be alone in your savings endeavours.

The Bank of Ireland Savings and Investment Index, published on 15th January shows that over half of Irish consumers were regularly saving during the December period. December is of course a rather difficult time for savings, and this sentiment was also reflected in the findings. Tom McCabe, global investment strategist with Bank of Ireland Investment Markets was quoted as saying:

“”Irish sentiment towards savings and investments eased in December mainly as a result of a weaker outlook for the savings and investment environment. This may be temporary given recent trends in the index but could also be an early indication that savers are looking for better returns on their money and are willing to consider alternatives to their savings account.”

This shows that although Irish consumers are continuing to save, there is a lingering fear that savings are no longer generating enough of a return in their traditional savings methods. This may see a shift in the Irish market towards investments rather than traditional saving. The Index found that 34% of Irish consumers also invested regularly during the month of December, much like the savings findings this could be either temporary or indicative of a new trend in Irish savings.

Hinting towards this being a possible new Irish trend is the fact that investments were more prevalent in the younger generation with 39% of under 50s regularly investing whilst only 26% of over 50s were found to be investing during the same period. Perhaps unsurprisingly, investment numbers were higher in November than December, which is to be expected as December is often a month in which consumers have less disposable income.

These findings also found that the Irish population have a strong preference towards saving should they encounter any windfall gain, but also a new move towards considering investments with windfall amounts.

Should you require any help or guidance on any savings, investments, business or personal finance matters please don’t hesitate to get in touch with us here at EcovisDCA.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Granting your Switch Wish

It is obvious that the changing mortgage rules have made it more difficult for first time buyers to enter the property market in recent years. Despite recent changes allowing for a decrease in the necessary deposit required (abolishing the 225,000 cap on a 10% deposit) the continuing rise in house prices has all but ruled many first time buyers out of the market for the foreseeable future. An issue which affects many but has seen much less column inches is the issue of switching your mortgage to another bank. This is something which has been increasingly difficult to accomplish in recent years with the ever changing financial market, but there may be a distant light at the end of the tunnel for those wishing to switch their mortgage in the future to reduce their repayments.

The Central Bank has recently stated that it will be considering imposing new rules which will make it easier for people to switch their mortgage to another lender. This exciting development follows recent research by Behaviour and Attitudes which found that only 4% of mortgage holders had switched to a new lender. Switching your mortgage to another lender can often result in a reduction in your repayments and other benefits as your needs grow and change in your home.

The proposal by the Central Bank would ensure that banks must offer greater clarity to their borrowers to ensure that they have all the information available regarding switching, something which is sorely lacking in the current market. There is also a suggestion that the banks will be required to ensure that borrowers have all the information regarding switching mortgage product and the associated costs of this.

The fact that so many of those surveyed had never even considered changing their mortgage is surprising given that Ireland’s variable mortgage rates have been found to be among the highest in the Eurozone. Lenders do not currently offer enough accessible information about these issues and as such it is not something at the forefront of buyer minds. Acting Deputy Governor Bernard Sheridan has been quoted as saying:

“It is clear that lenders could be doing more to facilitate consumers who are thinking about switching.”

The Central Bank suggests these new changes will be beneficial as over 109,000 people could save money by switching mortgages and will reportedly publish a paper later in the year in which these proposals will be set out.

Should you require any help, guidance or advice on these or any other business and financial matters please don’t hesitate to contact us here at Ecovis DCA where our dedicated advisors will be delighted to be of assistance.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

MORTGAGE WOES KEEP BUYERS ON THEIR TOES.

Mortgage rules have been a point of contention in Ireland for some time now and whether house prices fall or rise, it has become increasingly difficult for those hoping to gain footing on the first step of the housing ladder. Last year, mortgage rules were changed to mean that only 3.5% of income can be borrows, and there must be a 10% deposit on all mortgages up to €220,000, and a further 20% on any cost above this figure.

 

At the time of this change it was suggested that these rules would be in place for a period of a year and then re-examined. As they were put in place in February last year, all eyes will be on these rules to see if there is any change which might allow for easier purchasing. DNG have suggested that they would like to see the borrowing limit raised to 4% and the 10% deposit rule extended to €300,000 as they have seen over the past year that many people are becoming trapped by these rules and are unable to buy due to higher house prices and stricter rules.

 

It has been reported this week that we may see an even bigger shake up in the mortgage industry. An Australian lender, Pepper is reportedly set to offer new incredibly competitive mortgage rates which will target first-time buyers in particular. This arrival of a new lender is expected to push current Irish lenders into offering new lower rates in order to respond to competition and demand.

 

Already since the announcement we have seen Bank of Ireland offer a new bonus. This bonus would see them add 10% to first time buyers onto their existing deposit savings. Additionally, Bank of Ireland were already offering 2% back of every new mortgage.

 

Pepper is said to be set to offer rates as low as 3.55% for both first time buyers and those looking to switch lenders. Pepper Ireland boss Paul Doddrell has suggested that Pepper will also be first in line with offers for those who have found themselves refused by other banks, including those who are self-employed. It is suggested that Pepper will also be able to lend to those who found themselves in arrears during the financial crisis, but have now found their way back to meeting payments.

 

Whilst these new offers may not be a complete end to Irish mortgage woes as these offers will only be available through brokers, the suggestion of another adjustment of the overly tight mortgage rules will be a welcome one for many first time buyers and prospective first time buyers. It is hoped that we will see a general reduction in rates, with the onset of further competition in the Irish mortgage market. If you require assistance with your own or your company’s finances whilst hoping to gain a mortgage, please don’t hesitate to contact us here at DCA accountantswhere we are always happy to help.