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My Future Fund, or your own pension?

Auto-enrolment gives you a State top-up. A private pension gives you tax relief. Which is worth more depends on what you earn.

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€1 per €3 State top-up on what you contribute

€80,000 the earnings cap auto-enrolment is calculated on

6% each where contribution rates land after ten years

The basics

Two different ways of being helped

My Future Fund and a private pension both get you money from the State. They just do it differently, and the difference is the whole decision.

Auto-enrolment

My Future Fund adds a top-up

For every €3 you put in, the State adds €1. Your employer matches your contribution. There is no tax relief on top.

State adds€1 per €3

Employer addsMatches you

Tax reliefNone

A pension of your own

A private pension gives tax relief

At the higher rate that is worth 40%, which is a good deal more than a third. At the standard rate it is worth 20%, which is less.

Higher rate relief40%

Standard rate relief20%

Employer contributionUsually none

The bit most people miss

Your employer’s contribution is free money that exists in auto-enrolment and does not exist in a personal pension you set up on your own.

Opting out to start a private pension can mean walking away from it. Before anyone opts out of anything, that needs checking. It is usually the deciding factor.

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Before you decide

What to watch out for

Four things that decide this in practice, whichever way the arithmetic goes.

The rule of thumb

If you pay tax at the higher rate, relief usually beats the top-up. If you pay at the standard rate, the top-up is competitive.

You cannot be in both for the same job If you join a workplace scheme you come out of auto-enrolment.

Opting out has a window You can leave after six months, but contributions before that stay invested, and you get re-enrolled again later.

The rates step up It starts small and rises over ten years, so what it costs you now is not what it costs you in year seven.

The self-employed are not included at all If you work for yourself, none of this applies and a private pension is the only route.

Finnegan Maguire Financial Advisors

Not sure whether to stay in or opt out?

It depends on your salary, your employer and what you already have. Half an hour will settle it.

Book a first meeting

€1 per €3 The State top-up on what you contribute.

Employer Matches you

Cap €80,000

Relief None

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The two side by side

Put in your salary and your age and see which does more for you.

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Thanks. We will send that over shortly, and one of our advisers will follow up if you would like.

Illustrative only and not personal advice. Figures are checked against Revenue, the Department of Social Protection and the Pensions Authority, and revised after each Budget. Auto-enrolment shown at the phase one rate of 1.5% from you and 1.5% from your employer, with a State top-up of €1 for every €3 you contribute, on earnings up to €80,000. Rates step up over ten years to 6% from each. The private pension column assumes no employer contribution, which is the usual position if you arrange one yourself.

Where this sits

This calculator is one part of our pensions advice. The main pensions page explains the types, the relief, and how to tell whether the pension you have is any good.

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What the answer means

Look at the cost-to-you line as much as the total

The two totals are what actually lands in a pension pot for every euro that leaves your pocket.

If the numbers are close, stay where you are and top up separately. There is nothing stopping you being in My Future Fund and paying into your own pension as well. For a lot of higher-rate taxpayers that is the right answer: take the employer money, then use relief on top of it.

Half an hour, no charge and nothing to sign. We will run this on your real figures and tell you plainly what we would do in your position.

Book a call ↓ Call 0818 44 55 66

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Pick a date and time that suits you.

No sales pitch, just a conversation about what you already have, what it is heading for and whether we can improve it. You will get a written summary either way.

Cian O’Sullivan Director and Financial Adviser, Finnegan Maguire Financial Advisors

30 minutes Phone or video call, no charge

Rather just ring? Call 0818 44 55 66 or email go@splash.ie

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