Any suggestions on a good place to start or at least what not to do?
i disagree that 18 is too young for a person to start a pension. It is never to early to start contributing to a pension. If you start earlier you will have a much longer period of time to contribute so the contribution level can be lower. Plus you get the growth of the fund also. Is your son working at the moment? If he is, his employer should have a prsa scheme and that should be used as he will get tax relief on the contributions, if not, consider a unit linked savings plan (better for medium term savings).
What possible difference does it make what vehicle is used for the savings so long as it's happening?
but the tax is deferred until retirement thus you get the benefit of compound growth on gains without the revenue getting a slice. Surely the option to take some portion as a tax free lump sum also mitigates against the final tax take. btw. He's 17 and in first year of college so it may only be another three years before he's out working and getting tax relief on the contributions.
In response to Lion Bar I contacted New Ireland about this last year and they told me you had to be 18 to start a pension.
any fund growth in a pension fund is not taxed also. Brendan - i think you are being a bit cynical about the industry - if you are saving for anything it is never to early to start. it is not up to the industry to fund peoples retirement - it is up to them to provide vehicles to do that in line with tax reliefs provided by the government etc. It is up to the individual to fund for their retirement - the quicker you start the less cumbersome it is.
Just say the current tax treatment is a given and old age pension amounts remain the same.
At €17k p.a. you pay std rate tax and the levies. This is just €6k p.a. above the level of the old age pension.
If someone starts a pension at the age of 18 and has a decent career progression they will most likely end up funding a private pension in excess of €6k p.a.
In this scenario the will have paid in with std rate relief but are taxed at std rate relief plus levies on the way out for the privilege of locking away their money for 47 years!
So the general advice I would give an 18 year old is to wait until you are paying higher rate tax before even considering a pension. If that hasn't happened by the time you are 30 then you might want to reassess.
You're forgetting that gains roll up tax free in a pension fund. What about setting up a self admin pension. Buy a house (investment) with a mortgage in the pension's name. You get a tax deduction on the mortgage repayments (i.e. pension contributions to cover mortgage). The gain (hopefully) achieved rolls up tax free and you get 25% out tax free....
It's not as clear cut at all....
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