What benefits are there to having a Pension (Retirement Account) In Ireland?
As you point out, the main benefits of a pension/retirement account over a traditional cash/taxable account are the legal and tax benefits.  Most Western countries establish a specific legal definition for an account which is often taxed less or not at all relative to taxable accounts and which contains some protection for the owner in case of a bankruptcy.  The typical drawbacks for investing within such structures are limited investment choice, limited withdrawal rights (either in terms of age or rate of withdrawal), and maximum contributions.  The benefits are usually very clear, and your decision whether or not to open a pension/retirement account should depend on a careful weighing of the benefits and drawbacks. As to whether you may end up with less than you started, that depends on what you invest in.  As with all of finance, you must take more risk to get more return.  Although the choices inside a pension/retirement account may be worded somewhat differently, they are usually fundamentally no different than some of the most popular investments available for ordinary taxable accounts. Here's an Irish government publication that should give you some background information to get you started. In a nutshell, you get tax benefits, but cannot withdraw money without penalty until you reach retirement age.
I have had pension programs with two companies.  The first told you what your benefit would be if you retired at age X with Y years of service. Each year of service got you a percentage of your final years salary. There was a different formula for early retirement, and there was an offset for social security. They were responsible for putting enough money away each year to meet their obligations. Just before I left they did add a new feature. You could get the funds in the account in a lump sum when you left. If you left early you got the money in the account. If you left at retirement age you got the money that was needed to produce the benefit you were promised. Which was based on current interest rates. The second company had a plan where they published the funding formula. You knew with every quarterly statement how much was in your account, and what interest it had earned, and what benefit they estimated you would receive if you stayed until retirement age. This fund felt almost like a defined contribution, because the formula was published. If most people took the lump sum that was the only part that mattered. Both pension plans had a different set of formulas based on marriage status and survivor rules. The interest rates are important because they are used to determine how much money is needed to produce the promised monthly benefit. They are also used to determine how much they need to allocate each year to cover their obligations.  If you can't make the math work you need to keep contacting HR. You need to understand how much should be flowing into the account each month. On the face of it, it doesn't look like a very good deal - neither pension not annuity company are in it for the fun of it, so they'll take their cut from your money, and then invest it anyway. The rest depends on what they promise you - if they just promise you market returns then I don't see much sense to do it, you can do it yourself. If they promise you some pre-defined average return not depending on market conditions (and hope to get ahead by actually getting better return and pocket the difference) then it might make sense, if you are not a very proficient investor. This will get you a known benefit you can count on (at least if you get a company with good rating/insurance/etc.) without worrying about markets volatility and having to keep the discipline and calm when markets jump around. It may be hard, especially for somebody of advanced age.  Also, there's the part of government adding money - it depends on how much of it is added, is it enough to cover the extra fees? I would say that it depends.  If you have to do it now, or in the near future, I would keep the pension, as I think the current market is overpriced and approaching bubble status.  (And, to interject politics, because I'm pretty sure Trump will screw it up before too long.)  If you can take the money out and invest after it crashes, though... Though I'm sure that some people will object to this as market timing, I had a similar opportunity in '09.  I took the money, moved it into an IRA invested mostly in index & international funds, and have been quite satisfied with the result. I would lean towards taking the lump-sum too if that were my situation. However, the value of the sum offered is likely lower than the value of the pension plan would have paid out - otherwise how would it be any advantage to offer it?  So, uncertainty about receiving the benefits is reduced, but you're still likely taking a loss vs what was promised. It's better then the pension plan going completely insolvent and paying nothing, but no reason for celebration either. "The gross liabilities (benefit obligation) will still be there, regardless. They are *future* benefits.  Sure, you can increase funding to the plan to eliminate the *net* pension liability, but why? The new assets would earn very little. The shortfall is not an excessively large risk. The only reason seems to be the ""all-consuming focus on immediate results"" which is more rhetoric than reality in this case." This is not an answer to all of your questions but merely an eleaboration on one of your comments: Are there any other areas in the UK that would return rental yields   much above 10% net?   Shares. I could withdraw the money and buy shares for the dividend income, but it is hard to choose shares that yield more than about 6% and they are volatile. I wrote a post about using shares to invest a pension pot. http://www.sspf.co.uk/blog/016/ You may find it of some interest. Of course, the investing would take place within the pension 'wrapper' so you'd only be paying tax on the income taken out each year. The other alternatives you mention suggest paying for the expertise and time of an IFA would be a very economical decision. £1,000 to best use £150,000 seems a bargain to me. Some of the avenues you mention seem very risky from my understanding so someone to determine your tolerances and propose a holistic solution is a good path forward. Best wishes! "Why? Simply: because it has been mandated as law, and so you may have no choice in the matter whether to contribute or not. Quoting from GOV.UK – Workplace pensions: ‘Automatic enrolment’  A new law means that every employer must automatically enrol workers   into a workplace pension scheme if they: Next: even if you think you will work ""until you die"", you can still access the money saved in the pension scheme when you attain the required minimum age for withdrawals under your scheme. For instance, that may be age 55, but it may also vary by scheme. Becoming fully retired — as in stopping all work — is not a requirement to access retirement income from your pension scheme. In the eyes of a pension scheme, retirement is typically when you elect to take your income benefits according to the established rules of the scheme. Quoting from nidirect – Working past State Pension age: Continuing in work and your workplace pension  If you reached the age at which you can start claiming your workplace   pension scheme, you don't need to stop work in order to claim. You have   a number of options, including taking some of the pension you've built   up while continuing to work for the same employer. As to why things are set up this way: While some younger folk may, today, expect to continue working until death, for a variety of reasons that isn't always possible. Two typical such reasons are: disability, and involuntary unemployment (i.e. willing and able but still can't land the next job). Moreover, plans change. Young workers with health and vitality may expect they'll always feel invincible, but end up learning otherwise over time, and may come to appreciate the savings that were forced upon them. The ""forced savings"" aspect of state and state-sponsored pension schemes are meant to provide some safety net for those later years when it is a strong possibility that one can't continue to work. The alternative is to be a 100% burden on family and/or society." I know folks who considered retiring to another country. Their conclusion was that while base cost of living was lower, the cost of the things that they enjoy doing -- not to mention the cost of spending time with friends they didn't want to give up -- would be sufficiently higher to erase most of the advantages. Those of us who grew up in or close to cities feel much the same way about moving out to less-populated and less-expensive parts of our own country.  Basically, when cost of living is high it tends to be because there are more people who want to live there and are competing for resources (and driving prices up). Low cost of living is generally tied to less-desired locations, for the same reasons. IF you can find a location that appeals to you, and if you can get the resources there which your preferred lifestyle requires, this may make sense. For a while there were a number of professional writers moving from the US to Ireland, in part because the Irish tax structure heavily favored writers and other creative artists. (Katherine Kurtz spent several years living in a renovated Irish castle.) I'm not sure how many have stayed there after the novelty wore off. "Diversify between high risk, medium risks investments as well as ""safe"" ones like bonds authored directly from the EU.  All in all you re much better off than lending money to the bank through a savings account for no more than 1% in interest rate(given the current NL situation).  Congratulations on becoming financially independent(your investments covering your living expenses) in as low as 9-15years from now." Doesn't work like that. You're taxed on the lower band until 32ish and the balance is at 40%.   Use this link below to calc your tax  http://services.deloitte.ie/tc/  30k = 25,310 after tax // effective rate of 15.5% 40k = 31,170 after tax // effective rate of 22%  So you're gross raise of 33% will be worth 23% net to you.  You also have tax credits/USC/PRSI to think about - you seem like you haven't a breeze about the Irish tax system so I'd type PAYE &amp; Citizens Information into Google and start reading up on it. Many investment companies are also offering target retirement date portfolios to invest in.  They manage reducing the risk over time so you don't have to worry about it if you choose not to. If you havent yet maxed out your ISA, then its a no-brainer. You get excellent tax rebates and its silly not to take advantage of these before considering self investing in shares.   Note that even if your ISA is maxed out, the economic turbulence means that investing in individual stocks is an intimidating place for beginners right now.  The FSA is also looking at revising the average percentages used for pension, from 7% for adventurous investments, down to 5% or 6%, so there is industry wide recognition that on average the stock market is going to be a little less lucrative than it was a few years ago. Thats not to say you cant still make a whopping profit, but the chances of you doing so as a first time investor are remote to say the least. My advice would be to look seriously into some of the social lending sites, where you can still easily get a 7% return with minimal risk. Whilst I do have a portfolio which is performing well overall (I am a very speculative investor), I am moving a lot of funds into Zopa.com, as I am averaging 7% return with a lot less time, effort and risk than the stockmarket.  Whatever you decide, I think its time you thought about consulting an IFA. They can help you understand what sort of risk you are willing to tolerate, which is a very important aspect of investing. If I gift 50k to my Father who is retired but getting pension, will I get a 50k tax benefit? If Yes, then under which section would it be? 80C or other? There is no tax benefit for you on the 50K. This can't be deducted under any section. You have to pay tax. if Father's income i.e. Pension+gift doesn't come under tax slab and he doesn't wish to invest in tax saving scheme would I still be getting benefit? See above you do not get any tax benefit.  Other Notes: Edit: Start from zero, you don't have any money. Say for the year 2015-2016, you get Rs 30 lacs salary. After deductions [PF, etc] you pay [say approx] Rs 10 lacs as tax. Now you have Rs 20 lacs. Assuming you survive on thin air and save Rs 20 lacs.  If you invest this 20 lacs into FD. For the year 2016-2017 you will get Rs 2 lacs as interest on 20 lacs. Plus you have salary of Rs 30 lacs. So now your total income is 32 lacs and your tax will go up by around Rs 60,000 [approx 30% of Rs 2 lacs]. Instead if you gift this Rs 20 lacs to your father, there is no gift tax for you or your father. Now your father invested this Rs 20 lacs in FD, he will get an interest of Rs 2 lacs. This can be tax free to him if he does not have any other income. If he has say an income of Rs 2.5 lacs, then he has to pay tax on the Rs 2 lacs at 10% ... Now he can gift you the Rs 2 lacs for 2016-2017 there is no gift tax to you or him. In the UK you have an allowance of £40,000 per annum for tax relief into a pension. This amount includes both your and your employer's contributions. If you earn more than £150,000 per annum this allowance starts to reduce and if you earn less than the allowance, your allowance is limited to what you earn. You can also carry over unused allowance from up to 3 years previously. If you stick within this allowance you won't pay tax on your pension contributions, if you go over the excess will be subject to tax. Salary exchange normally lets you avoid the National Insurance value of your contribution being taxed. If you paid your own money into your pension (without going through salary exchange), your contributions would have the 20% basic rate of tax credited to them and if you're a higher rate taxpayer you could reclaim the difference between the basic rate of tax and the higher rate of tax you pay but the National Insurance you've paid on your own money would not be reclaimable. You can't get the money back you've paid into your pension till you are are 58 (given that you are 27 now), the minimum age has risen from its historic 55 for your age group.  That's the pension trade off, you forgo tax now in the expectation that, once retired, you will be paying tax at a lower rate (because your income will be lower and you are much less likely to be subject to higher rate taxation) in return for locking in your money till you're older. Your pension income will be subject to tax when you eventually take it. There are other options such as ISAs which have lower annual limits (£20,000 currently) and on which your contributions do not attract tax relief, but which are not taxed as income when you eventually spend them. ISAs and pensions are not mutually exclusive so if you have the money, you can do both. It's up to you to determine what mix of savings will be appropriate to generate income for your eventual retirement. If you are living in some other country when you retire your pension will be paid net of UK tax. You might then be able to claim (or pay) any difference between that and your local tax rate depending on what agreement exists between the UK government and the other country's government. A matching pension scheme is like free money. No wait, it actually IS free money. You are literally earning 100% interest rate on that money the instant you pay it in to the account. That money would have to sit in your credit card account for at least five years to earn that kind of return; five years in which the pension money would have earned an additional return over and above the 100%. Mathematically there is no contest that contributing to a matching pension scheme is one of the best investment there is. You should always do it. Well, almost always. When should you not do it?