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Benefits payable on retirement

Making allowance for dependants

If you have dependants it will be important to ensure that they are protected in the event of your death after retirement. Not all pension arrangements include pensions for dependants.

If you are a member of a defined benefit scheme, depending on the rules of your scheme, there may be no pensions paid to your dependants in the event of your death, or a proportion of your pension (e.g. 50%) may be paid to a qualifying adult dependant.  Pensions may also be payable to your dependent children (if any) in the event of your death under the rules of your scheme.

If you are a member of a defined contribution arrangement and you buy an annuity (pension) at retirement, you will be able to decide whether to incorporate the payment of an adult dependant’s pension payable in the event of your death.  You will also be able to incorporate a minimum guaranteed period of payment, so that the annuity continues to be payable for a fixed period, whether you live or die. Adding a dependant’s pension and/or a guaranteed payment period carries a cost meaning that your own pension income will vary, according to the options that you select.

The following table shows sample annuity payments allowing for different benefit options, based on a retirement fund value of €100,000 and market annuity rates in July 2020.  For the purposes of illustration all the annuities shown below are ‘level’ annuities that won’t increase after commencement and dependant means adult dependant.

Type of level annuity (pension)Payable from age 65Payable from age 66
Annuity with no guaranteed payment period and no dependant’s pension€3,601 p.a.€3,745 p.a.
Annuity with guaranteed payment for 10 years but no dependant’s pension thereafter€3,552 p.a.€3,685 p.a.
Annuity with guaranteed payment for 10 years and dependant’s pension of 50% thereafter€3,153 p.a.€3,265 p.a.
Annuity with guaranteed payment for 10 years and dependant’s pension of 67% thereafter€3,037 p.a.€3,141 p.a.

These pension figures are given for the purpose of illustration only and are based on gender neutral market annuity rates in July 2020, sourced from Irish Life.  They assume an upfront commission charge of 2% of the investment value, i.e. €2,000.

There is absolutely no guarantee that similar rates would be available in the event of an actual purchase in the future.