New Year’s a great time for looking forward, making fresh plans and setting new goals. We take our hat off to anyone who’s still off the chocolate and following their new exercise regime. For those of you who’ve already fallen off the wagon – don’t worry, there’s always next year.

But what if your new goal was something that would really improve your life and financial future? Retirement might seem a long way off but we’re pretty sure you’ll need more than a free bus pass and contributory state pension to keep you going once you get there.

With that in mind, here are my top tips for pension planning.

Tip 1: Start saving for retirement now

The sooner you start making contributions or increase your current contributions, the greater your accumulated fund is likely to be when you retire. You’ll have contributed more and have had more time for your investments to increase in value. Remember what you learned about the power of compound interest back in your school days? It’s worth remembering, every month you delay is likely to have an effect on the size of your eventual outcome.

Tip 2: Make the most of the tax relief available to you

The ‘Renewed Programme for Government’ published in October of last year said “We will introduce a single 33% rate for tax relief on private pension provision in the context of the National Pensions Framework”. The good news for higher rate tax-payers is that this is unlikely to happen for a couple of years yet. So, if you are a higher rate tax payer you should contribute as much as you can afford in 2010 to avail of tax relief at 41%. And, if you pay tax under the PAYE system you are also entitled to relief against PRSI at up to 4% and against the Health Levy at up to 5%.

Tip 3: Set a target for retirement

It’s important that you set yourself a target for the amount of capital you wish to build up by retirement age. The Commission on Taxation Report (2009) recommended that a tax of 20% should be payable on retirement lump sums in excess of €200k and the Minister For Finance accepted this recommendation, saying that “It will be considered in the Government’s National Pensions Framework.” If this recommendation is implemented the optimum retirement capital for those with PRSAs, that are not AVC PRSAs, will be €800k. Not a bad little pot of money to build in such a tax-efficient manner and should be seen as the minimum value that your retirement fund target should amount to. So, why not set yourself a target of accumulating €800k in today’s terms.

Tip 4: Consider putting all your retirement funds together

Many individuals change employers over the years and as a result have more than one retirement savings fund. If you’re in this situation, it may be well worth your while transferring these separate amounts into one account. That way it will be much easier for you to keep an eye on the current value of your total retirement savings by having everything in one place.

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