• What type of pension plan is most suitable for me?
• What is a contribution and how much should I be contributing?
• What does the Government provide?
• How does Tax Relief Work?
• What are the tax relief limits for pension contributions?
• What are the Government doing to help encourage private pension provision?
• What income should I be aiming for in Retirement?

The most suitable pension plan for you will depend on your employment details. There are two main kinds of pension: Personal pensions are only available to the self-employed, workers whose employer does not offer a company pension scheme for them, or workers who have decided not to join their employer's scheme. Executive (or Company) pensions are available to people whose employers have a scheme in place, or are willing to put one in place.

The amount you invest in your pension plan is called a contribution. Your contributions should increase each year in line with inflation to help keep your plan in line with the increasing cost of living.

Most people underestimate how much they'll need to save to provide an adequate income when they retire. The earlier you start to save, the less money you'll have to put aside each month to reach your goal. It's never too late but it's so much easier when you start early.

Your contribution should be sufficient to enable you to retire on a total income, including state pension, of two thirds of your pre-retirement income.

If you would like to know more about what income to aim for on retirement.

You will get the State Contributory Old Age Pension as well as your own private pension when you retire provided you have made the required number of PRSI contributions throughout your working life. If you do not have the required number of PRSI contributions you may be entitled to an Old Age Non-Contributory Pension. This is a means-tested payment for people aged 66 or over who do not qualify for Retirement Pension or Old Age Contributory Pension based on their social insurance record.

By contributing to a pension plan you can reduce the tax you pay and instead invest it for your retirement. If you have a Personal Pension Plan you pay the full contribution and then claim back the tax relief in your annual return. If you have an Executive Pension Plan you pay the net cost from your salary and the government's tax relief automatically makes up the difference.

If you start a Personal Pension Plan, you will receive a tax certificate shortly after your plan starts, which you should send to your tax inspector. If you are self-employed, send this certificate in with your annual returns and your tax bill will be reduced for you. For Executive Pension Plans the tax relief is given to you through the PAYE system. The money going into your pension plan is never taxed as it comes from your gross salary. You can even save on PRSI contributions.

Tax relief is granted on pension contributions at the top rate of income tax that applies to you. The following table illustrates the effects of tax relief on monthly contributions:

The tax relief limits for Personal Executive Pension contributions are detailed in the following table:

In the 1999 and 2000 Finance Acts the Minister for Finance made some significant changes to pensions legislation which allow self employed people, proprietary directors and AVC fund holders to retain ownership of their funds when they retire.

In the past, after taking a tax free lump sum of up to 25% of the fund, the balance of the proceeds of personal pension plans had to be used to buy a pension for life in the form of an annuity from a life assurance company.

Now people retiring can opt to take the remainder as cash (less a tax charge), or to leave their fund invested in an Approved Retirement Fund from which they can withdraw income as they require. Approved Retirement Funds can also be used as a very tax effective means of passing wealth on within a family.

The flexibility which these options provide is another big incentive for taking out a pension plan, and in time it is expected that they will be available to a wider range of people.

The amount of income you will need in your retirement will depend on your personal circumstances when you retire. Most people should set a minimum target of two-thirds of final income.

It is often suggested that your need for regular income will reduce on retirement. This argument is based on the assumptions that your mortgage should be paid off, your children should have left home and you will not face commuting or similar travelling expenses.

On the other hand, there will still be bills to pay. You should not be forced into a lower standard of life just because you are no longer working. Retirement means you have all the time in the world, with proper pension provision you can make the most of this time.