Page 7 - Group Insurance and Retirement Benefit IC 83 E- Book

allowable employee contribution, originally 15% for all, is now age related: 15% for

those under age 30; 20% between 30 and 39; 25% for those aged 40-49; and 30% for
those aged 50 or over. Employer contributions are made in addition, as long as the overall

benefit limits are not breached. An earnings ―cap‖ of €254,000 applies to contributions
by employees,

What happens when the contributions are paid in?

Once contributions are received by the pension scheme trustees, they are invested
through an insurance company or other investment manager. They are usually invested

separately for each individual member, so that the member‘s share of the fund can be
easily tracked.

Exactly how they are invested depends on a number of things, including how close the
member may be to retirement age. For example, if the member was quite close to

retirement, appropriate investment would be in assets whose value was not likely to
reduce. A younger member might invest in more volatile assets, in the hope of making

substantial capital gains before he/she needs to ―consolidate‖ in the run-up to retirement.

The assets of pension funds build up without any tax being paid on investment income or

capital gains. Under normal circumstances, therefore, they should accumulate faster than
an investment fund that has to pay tax.

What Happens When I Retire?