How the Pension Route Can Double Your SSIA
Thursday January 12th 2006
by Bill Tyson, Personal Finance Editor

FINANCIAL advisers Acumen & Trust have found a way through which you can double your assets from maturing SSIAs.

The firm calculates you can increase your windfall from €40,000 to €80,000 per married couple.

SSIAs will produce an average return of €40,000 per married couple between next May and April 2007.

The first step is to invest €71,428 into either a PRSA/Personal Pension or AVC.

After you get back your tax/PRSI at 44pc (42pc Top Rate Tax + 2pc Health Levy), the net cost amounts to just €40,000. After SSIAs mature, you could continue to pay the maximum contribution.

Investing €907 each month into your pension would cost only €507 net (after tax/PRSI relief) i.e. the same as the maximum amount a married couple jointly pay into their SSIAs.

After 12 months, even assuming no growth on your pension contributions, you would have accumulated a fund of €10,884 - plus the lump sum pension fund of €71,428 (see first step above) resulting in a total fund of €82,312, which has more than doubled the value of your maturing SSIAs.

"After two years, assuming investment growth of 6pc per annum and that you continue to make contributions to the pension, you would have accumulated assets of €102,677 - not bad from €507 per month seven years ago!," said David Robb, director of Wealth Management Services of Acumen & Trust.

Pension contributions are limited by Revenue age related rules and may impact on the above calculations.

Original Article: Irish Independent