How much could you earn from investing? 5 & 7 years Example

Learn how compound interest can help you grow your wealth over time with this guide on investing. Discover the best ways to invest your money, how to maximize returns, and the tax benefits available to high-earning investors in Ireland. Find out the difference between an investment and a pension, the risks associated with investing in stocks and shares, and the long-term benefits of investing. Get started with compound interest today and make the most of your money with the help of a financial advisor

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Don’t leave a job without your Pension

If you’re here, it’s likely that, just like many others, you are concerned about the impact of your pension if and when you part ways with your job. Maybe it has already happened and now you need more info on how to effectively plan for retirement.

Have you ever wondered how your pension plan is affected when you leave a job? We get asked this question often, and it’s an important one to answer.

As the current state of our world progresses, people are taking on new jobs or even transitioning their career paths more frequently than in times past. This means that many individuals are leaving Pension savings behind with previous employers. It is imperative to consider all aspects – including your Pension! – when making a move from one job to another

When you are departing a job in County Limerick, it is essential to consider your long-term retirement objectives before making any rash decisions about pension plans. Even though abandoning your pension might appear like the simplest solution, this could have an unfavorable effect on Retirement Planning if it isn’t incorporated into an all-inclusive plan. 

Deciding which pension plan is right for you depends on whether it’s a Defined Contribution (DC) or a Defined Benefits (DB). If you are employed by private companies, the majority of the time your pension plan will be DC. On the other hand, if you work in civil and public services then DB plans are more frequent. The options open to you hinge upon which type of retirement fund that was chosen for you!

Leaving Service Options: Defined Contribution Pension

As soon as you finish your employment, it is essential to understand that trustees of the scheme hold and manage all pension benefits legally. Therefore, when you depart from the company, your legal status will transition from an ‘Active’ member to a ‘Deferred’ one. We will explore what remaining in the ‘Deferred’ category entails shortly.

When you leave work, make sure that you receive both documents, known as the ‘Leaving Service Options Letter’ and the ‘Pension Benefits Options Statement’. These two papers are essential in understanding all aspects of how this transition affects your retirement funds.

It’s imperative that you obtain this statement from your pension trustees right away, as it contains all the necessary information to assist in making informed decisions concerning your retirement. It provides details such as date of entry and exit into the scheme, a thorough appraisal of its value, and an array of possibilities for every single situation upon leaving. This document is essential when designing potential pathways forward; therefore don’t delay – secure yours today!

There are three major options to consider for your pension.

1: Leave it in the Pension scheme (in other words do nothing)

Preserved Benefits, regulated by the Pensions Act, can offer a certain level of security when it comes to your pension plan. However, there are some potential drawbacks that you should be aware of before making any decisions about your future financial standing. So that you can make an informed choice for yourself and benefit from expert advice along the way, why not speak with one of our knowledgeable advisors today?

Though not advised, staying with the scheme and doing nothing may seem like a simple choice. Nevertheless, this will leave you in the dark as there is no guarantee that they’ll keep communication or provide any updates regarding your pension funds management and investment decisions. Consequently, you won’t have freedom to make informed choices based on those reports.

By taking your pension funds out of investments and converting them to cash, you are reducing their potential for growth. Not only will this prevent the ability to beat inflation, but it could also affect meeting retirement goals and objectives. In order to avoid extra charges or delays in realizing financial independence, consider maintaining your pension fund invested with a dependable firm that can generate returns over time.

If you are considering relocating and want to review your alternatives, we encourage you to ask yourself the following inquiries: Do the fees appear reasonable and understandable? Is my Pension Provider helpful and reliable? Has my Pension performed optimally? If your responses were anything other than affirmative, it would be wise for you to transfer your Pension before moving.


As a deferred member, you can still access your pension at retirement. You have the opportunity to withdraw tax-free funds in one lump sum, transfer money into an Annuity program, or choose an Approved Retirement Fund (ARF).


As a Trustee of the scheme, it is not mandatory for you to communicate with its members and provide regular updates.

Moreover, your retirement options are determined by the rules established within the system. Additionally, since most schemes focus on catering to a large number of employees at once, there are usually only limited investment opportunities available, which could lead to underperformance in some cases.

Without access to professional Financial Advice after leaving their employer, individuals can find it difficult to make informed decisions about their retirement plans. Furthermore, if someone passes away before they have the opportunity to retire, this may cause complications for their dependents.

2: Transfer your pension to your new employer’s pension scheme

When transitioning to a new job, transferring the value of your pension benefits is usually an option. You can move it over to your new employer’s scheme – although not all schemes accept this, so ensure you check with both employers first. Though there are pros and cons in deciding on this choice, it’s critically important that you seek professional advice before making any decisions.

Managing multiple pension pots can be a cumbersome task, but this option eliminates that hassle and allows you to effortlessly calculate your total retirement package. Best of all, it gives you accurate insight into the income level you will receive when retired.

When transferring your pension benefits, you may need to sell existing assets in order to be transferred. This could cause a prolonged period away from the market and can result in selling at a lower price and buying back for more money depending on current conditions – an outcome you might regret later.


Take charge of your future and simplify your retirement savings with pension consolidation. This can help you keep track of the development of your wealth, all from one centralised location.


If you’re considering departing your current job, it’s essential to be aware of the potential risks. Switching employment may strip away any salary or rights established through service. To protect yourself and ensure a smooth transition, make sure all queries are addressed before making a move!

If not done properly, transferring funds may prove too difficult to accomplish – leaving you powerless over both your money and any associated investments.

To get the highest possible pension benefits, one should wait until their departure from their current employer to take action. Maximize these rewards by accessing them at this specific time for best results.

3. Transform your pension into an account that is personally owned by you.

When deciding your retirement scheme, you have the ability to transfer the value of your pension fund into either a Personal Retirement Savings Account or Buyout Bond (PRB), where you are solely responsible for determining its investment strategy. With these accounts, you will feel secure in knowing that you hold complete control over it.


When you independently manage your pension and investments, all the money is securely in your name. So rest easy knowing that you have complete command over what matters most to you.

Achieving retirement goals is attainable when you seek the assistance of a qualified Financial Advisor who can create an individualized plan that aligns with your risk threshold. This safeguards your accrued benefits and provides peace of mind.

In addition, it’s effortless to move PRBs between companies now! At age 50 you will be able to benefit from sizable tax-free lump sums as well as more choices for withdrawals.


Yearly Management Charges may fluctuate depending on the funds and investment classes you opt for, but your financial advisor can give wise counsel to assist in guiding this decision.

4. (in some circumstances) Take a refund of contributions

If you have been in the pension scheme for less than two years, you are eligible for a refund after taxes at a basic rate. Please note that this does not exclude your employer from receiving their contributions back if you decide to go through with it.

What is the most suitable choice for you?

Ultimately, you have the ultimate decision-making power; but if you’re struggling to come to a conclusion on what course is best for your financial future, consulting with an experienced Financial Advisor could be the key. We are always available and eager to offer guidance when it comes to personal finance matters such as this one.

Ultimately, the decision is yours to make based on your specific situation; yet we firmly urge speaking with one of our experienced advisors before making any major financial decisions. Many factors must be taken into account in addition to a thorough comprehension of the potential ramifications before arriving at a conclusion.

Our Advice

When it comes to preserving your Pension entitlements during a job transition, opting for the Personal Retirement Bond is always wise. After all, these funds are yours – why not take charge of them? Plus, this option ensures that you can maintain full control over your retirement savings in an easy and direct manner.

At FJ Hanly & Associates, our elite and impartial Financial Advisors are here to assist you in deciding whether pension transfer is the ideal option for your circumstance. If so, we promise to promptly guide you through every stage of this process—guaranteeing that all money will be carefully handled and strictly monitored.

Personal Retirement Bond (PRB)

For those aiming to take charge of their retirement savings and invest with a plan, the Personal Retirement Bond (PRB) is your solution! With this option, you can select the amount of risk that best suits you – all while being supported by experienced Financial Advisors. You even have the power to move funds from one provider to another if it means improved charges or fund allocation rate, as well as access to money when needed. Please bear in mind though: once purchased, PRBs cannot be contributed further.

Opting for this option allows you to bypass communication with your former employer or Trustees. Though the Annual Management Charges may be slightly more costly than some other options, they are still competitive and include active management of funds which could potentially generate better returns in time. Plus, these charges come with full transparency!

What happens at Retirement Date?

On retirement, you can benefit from a tax-free lump sum of either 25% of your fund or up to 150% of what your salary was based on service. The maximum amount that can be taken out is €200,000! Once the retirement lump sum has been obtained, you may then opt for an annuity, which will provide a steady income throughout life, or transfer the remaining balance into an approved retirement fund (ARF). As part of the leaving service options: defined benefits pension scheme by law, this lump sum payment must also be made.

It is highly recommended to seek professional advice from an experienced advisor before transferring out of your Defined Benefits pension scheme. To begin the transfer process away from your former employer, simply reach out to their HR department and inquire about their ‘Leaving Service Options’ plan. This will be essential in helping you ensure all of your accrued benefits are seamlessly transferred into a new retirement savings option with speed and ease.

Submitting your request to the trustees for a “Leaving Service Options Letter” through either the HR department or pension administrator will provide you with all of the necessary information pertaining to how much benefits have been accrued, as well as what options are available.

As soon as you read this letter, please do not hesitate to contact us in any way that best suits your needs. Whether it’s over the phone or with a Qualified Financial Advisor, we are here and highly motivated to offer whatever assistance required!

Get in touch with us for help with bringing your pension under your control and knowing your options.

Think life insurance doesn’t pay out? Think again

Aviva Life & Pensions Ireland DAC, one of the biggest insurers in Ireland announced that their customers received a total payout of €106.5 million for 2021—a slight decrease from 2020’s amount of nearly €109 million. 2,534 individuals across life policies, specified illness and income protection were compensated with this grand sum (2020: 2,585).


Last year, cancer-related claims comprised the bulk of specified illness payments for both sexes; men made up 45 percent and women 65 percent. Heart conditions dominated male cases with 35%. However, these figures differ from last year when 77% of female claims and 60% of male were attributed to cancer.


Life assurance: 

In 2020, Aviva paid out a colossal €51 million to 453 death benefit claims – with one pay-out topping off at an unprecedented €2 million. Cancer was again found to be the main culprit among these cases; cardiac and respiratory issues following it in line for second and third place respectively


How does it work?

For example, Anne earns 40k per year. if Anne passes away, her pension scheme has the potential to pay out a lump sum of her salary x3 (€120,000).


If you want your dependents to be taken care of in case something happens to you, it’s important that you explore what benefits would be provided in such an event and make sure they are adequate – or look into taking out life assurance cover or increasing any existing benefits.


Specified Illness claims:

Over the year, a total of €12.8 million was disbursed to 132 customers struggling with critical illnesses; in 2020, this figure had been at €10 million for 126 customers. On average, women claiming on their policies were 52 years old when diagnosed – 34% of claims related to breast cancer (-16% compared to 2020) and 31% for other types of cancers (+4%). Cardiac issues accounted for 12%.


An analysis of male claims revealed that, in comparison to 2020’s 15%, cancer-related claims fell by a notable 45%. Additionally, heart conditions decreased from 43% to 35%. In contrast, stroke-related claims saw an increase of 3%, reaching 7%. Men claiming on their defined illness policies averaged 56 years old – the youngest female at 33 and the youngest male 36.


What is Specified Illness protection?

Specified Illness Insurance, also known as Serious Illness Insurance, offers a one-time lump sum benefit in the event of being diagnosed with an illness that meets the policy’s specified criteria. Unlike private medical insurance plans from providers such as VHI and Irish Life Health, this type of coverage does not pay for your medical or hospital care; rather it provides you with an immediate financial cushion at the time of diagnosis. With Specified Illness Insurance on your side, you can rest assured knowing that even amidst significant health challenges there is help available to ease some of life’s worries.


Do I Need Specified Illness Insurance?


If you have kids or other people who rely on you, a Specified Illness Insurance policy is essential. Without it, your family may not be able to cope with the financial repercussions of serious illnesses that are specified in this insurance plan such as loss of income and medical & rehabilitation costs. Having this coverage can help safeguard your loved ones from unexpected expenses.


Secondly, if you are encumbered by debt, a Specified Illness insurance policy is the assurance that your financial needs will still be taken care of even if you fall ill and can no longer earn an income.


Income protection claims:

In 2021, Aviva paid out an astonishing €46 million to around 2,000 income protection customers – not too dissimilar from 2020’s total payout of €45 million. Those sums were given to policyholders who encountered health or injury issues that prevented them from working in the time frame specified. Analysing new claimants last year, it became apparent that more women took advantage of their policies than men at 53% compared to 47%, a continuing trend we have seen over the years.


The age range of claimants last year stretched from 22 to 48 years old, demonstrating the importance of income protection for individuals of all ages. Mental health-related issues were a leading factor in claims at 25%, with orthopaedic problems following close behind at 24%. Cancer accounted for 21% and neurological conditions 9%. This marks two consecutive years that psychological issues have been highest amongst claim causes.


What is income protection?

If you are temporarily unable to work due to injury or illness, Income Protection will provide a reliable flow of income until your return. The plan is available up to age 54 and can be ended at either 55, 60, or 65. You are eligible for coverage up to 75% of your yearly earnings minus state benefits or other plans; the maximum payout being €250,000 annually. Be aware that any payments received from this plan will be classified as taxable income by the government.


You can select the earliest start date of your payments as soon as 13 weeks—or what we call a “deferred period.” The cost you pay for coverage is based on factors such as your age, health, deferred period and desired level of protection.


FJ Hanly & Associates is one of the leading providers of life assurances, specified illness and income protection insurance in Limerick. We are dedicated to helping our customers manage the financial consequences of serious illnesses, injury or other incapacitating events. With our policies, we guarantee that you and your family will be able to cope with any medical costs or unexpected expenses associated with long-term. We navigate the best providers based on the needs of your family and/or business


Inflation Increases: What you can do


How does inflation work?

In 1986 The average house price in Ireland was €37,000. Today it is €275,000 – an increase of nearly 600%. To put this in perspective, if you had purchased a house in 1986 costing €37,000 and sold it now for €275,000 your money would be worth over 7 times more (€255,000). This difference is due to inflation.

Impact on savings or investments

Many people don’t consider inflation when saving or investing.

A few frequent things I hear when conversing with clients regarding their savings or investment are “I don’t want any risk,” and/or “I am content with my money on deposit, it’s safe.”

However, from a value of money perspective, keeping your money deposited isn’t as secure as you might believe.

People don’t factor in inflation

One of the clear impacts inflation has on your savings is that it decreases the purchasing power, which means that if you save €100 today and there is a 2% inflation rate, next year you will only be able to buy €98 worth of goods with that money.10 years down the road, you might think you would need €120 to have the same buying power as today, but because compounding occurs with inflation ,you would actually need slightly more than €121.

The picture become slightly bleaker when you consider the current rate of inflation in Ireland at a whopping 10%.  This means that you would need €231 in 10 years to have the same buying power as today.

Compounding effect

Though it may seem innocuous, inflation slowly chips away at your wealth over time. In a single year, the average rate of inflation is only 2%. But as years pass, that number snowballs–and compound interest becomes an even more powerful force. Nobel Prize-winning physicist Albert Einstein called compounding interest the most powerful tool on earth.

Compound inflation is the reverse of compound interest–working against you instead of for you. To put it simply, this means that over time, your money will be worth less and less due to rising prices. For example, if we looks at the effects of 2% inflation on savings over 25 years, we find that prices will have increased by almost 65%. This means that in 25 years €164.06 would be needed to buy what could currently be bought for just €100.

Inflation Causes Uncertainty

The value of money is always in flux, making retirement planning especially difficult. This is complicated further by not knowing what the annual inflation rate will be.

Inflation- The Leaking Bucket

Over time, inflation has averaged more than 3%. Consequently, it has taken less than 22 years for prices to double. So, as you are saving, remember that it is like trying to fill a bucket while water is leaking out of tiny holes. You have to pour the water in faster than it leaks out.

What About Interest on Your Savings?

So far, we have only looked at savings that were hoarded. What if you deposit them in the bank? Won’t that help? If the interest rate is equal to inflation, then it would be like having a tap pour water back into your bucket at exactly the same rate as it was leaking out.

Alas, current bank interest rates are incredibly low, so there is barely any influx of cash going into banks from interests; meaning, the level in that metaphorical bucket has been declining almost as fast as physical piggy banks.

Gold & Silver

Some investments may not perform as well when inflation rates are high. For example, people often consider gold a safe investment during periods of inflation because its value does not go down in relation to other objects. However, over time commodities like gold and silver can become overvalued or undervalued.

While inflation has been historically low in the last 15 years, gold and silver have still outperformed its effects. However, that may not continue to be true. A major downside of commodity investing is that you don’t receive any current income from these assets–you are purely relying on their value increasing to keep up with inflation.


Many Irish people invest in property, as it is thought to be a good way to keep up with inflation. However, this was not the case during the market crash, when values plummeted. So, like with everything else, it is important to buy at the right price point. Owning your own home does not produce income (although it may save you from paying rent), but investment properties can provide some protection against inflation and generate income at the same time.

What about stocks?

Ideally, the prices of companies would grow along with inflation so that the company’s value is maintained. But when you invest in stocks, other factors come into play including stock speculation (boom and bust), the ability of management to adapt to change, changing market demand for the company’s products, etc.

Many times, stocks will increase at a higher rate than inflation, letting your investment retain its purchasing power. Although it’s still possible to buy during a peak and then see the value dip shortly after or for your investment to grow more slowly than the market as a whole, some shares also pay dividends on top of the possibility for share price growth. Dividends from shares act similarly to interest payments, filling up your “bucket” while in theory, the share prices themselves should rise along with inflation.

Other Factors

Taxes can also play a role in the real return you experience, after accounting for inflation. In our first example, if the money had been hidden under a mattress, taxes would not have been levied against it because €100 is considered after-tax income. But since there was no other income generated, taxes were not a factor.

If you had your money in the bank during this scenario, taxes would be small because interest rates are tiny and so the money didn’t make much, meaning there’s not much tax due. However, if inflation was 2% but your savings account only paid 2%, then you would technically still be losing out because you’d have to pay taxes on that measly 2%. So basically, with a regular inflation rate of only 2%, you may need to earn 3% interest just break even–and that’s including taxation.

When you get taxed on your interest, it’s as if some of the money that would have gone into your savings is being redirected away, so it never has a chance to enter the bucket. To minimize risk (hedging) and increase chances of success, use diversification in your saving strategy. For example, if most of your saved funds are in cash equivalents like deposit accounts or savings accounts., these can be used for immediate expenses that aren’t prone to much inflation.

Using a mix of savings methods is the best way to protect your money against inflation and market uncertainty. Commodities like gold and silver, as well as real estate, will keep up with inflation better over time but won’t generate any income in the meantime. Shares in companies may provide some dividends along with maintaining their value against inflation, but they are also unpredictable. Therefore, using a combination of these strategies is the smartest way to ensuring you don’t lose purchasing power due to market fluctuations or price increases.


You should save and invest based on your unique circumstances by customizing a plan that works just for you. This way, you’re not putting all your eggs in one basket. And always get professional advice before making any final decisions. The institution you’re currently working with may not have the best solution for you, but a financial advisor will be able to offer unbiased suggestions from different places.

There are two different aspects to consider when planning your savings:

1. Your time horizon

– How long do you have to save?

2. The return on your investment

– What level of risk are you comfortable with?

By taking these two factors into account, you can develop the best strategy for investing your savings so that it will maintain its value against inflation. It’s difficult saving money, but it’ll be worth it when you have peace of mind knowing that your nest egg is safe from inflation. Talk to a financial advisor today about how to start safeguarding your wealth against inflation and begin seeing results soon.

If you would like to get more details, please give us a call.

The following is for informational purposes only and doesn’t qualify as financial advice, but we advise that you speak with us before making any decisions related to finance. A comprehensive approach is ideal for financial planning and we’re confident we can assist you in putting your plans into action.