In uncertain times, individuals may be apprehensive about making contributions to their pension plans, given the volatility in investment markets. However, it is important to understand the numerous benefits of personal pension contributions and how to navigate market fluctuations. Milestone Advisory’s Darragh Hogan writes.

One of the most significant benefits of personal pension contributions is the provision of a secure income in retirement. As people are living longer, it is essential to save more for retirement to ensure that individuals have the financial means to support themselves over a more extended period of time. The earlier and more consistently individuals contribute to their pension plans, the more likely they are to achieve their retirement savings objectives.

Another benefit of personal pension contributions is the tax relief they provide. Income tax relief is granted on contributions made within age-related bands, making them an attractive option for those looking to reduce their taxable income. Moreover, pension investments are not subject to Irish tax on investment income or gains until retirement, providing a significant advantage to investors.

At retirement, individuals may withdraw a tax-free lump sum from all their pension benefits, which can be an essential component of retirement planning. Depending on the pension vehicle, individuals may also withdraw further lump sums at the standard rate of tax, despite the fact that income-tax relief may have been granted at the individual marginal rate. It is important to note that the lump sum an individual is entitled to will depend on the pension in place.

Finally, given the uncertainty surrounding the State Pension, it is crucial for individuals to privately fund their income in retirement. As the overall Irish population grows older and life expectancy increases, the ratio of people in work to those in retirement decreases, putting increasing pressure on the State Pension. As such, it is essential for individuals to make pension contributions to supplement their income in retirement.

While recent market volatility may cause some investors to hesitate, it is possible to navigate market fluctuations by employing Unit Cost Averaging. This strategy involves making regular investments over a period of time, rather than a lump sum investment. This approach helps reduce the impact of market fluctuations and downside risk by buying more investment units when prices are low and fewer units when prices are high.

In conclusion, while it is understandable to feel cautious in the face of market volatility, the benefits of personal pension contributions cannot be ignored. With the potential to secure retirement income, tax benefits, and protection against the uncertainty surrounding the State Pension, regular contributions to a pension plan over the long term makes sense for the majority of individuals. By employing Unit Cost Averaging, investors can mitigate the impact of market fluctuations and stay on track to achieve their retirement savings goals. It is essential to consult with a financial advisor to determine the best pension plan and investment strategy for individual circumstances.


Here to help you navigate your way to financial security.

The Milestone Advisory team are qualified financial services consultants. We specialise in helping professionals in the construction sector and related industries. Our team will work with you to review your finances, explaining your options in clear English.

No jargon – just the facts.

For more information, contact Darragh Hogan ( Please feel free to reach out to us at For the latest updates, subscribe to our newsletter here.