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Funding for retirement: Pensions for self-employed writers by Roy Hunt

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Roy Hunt

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Since 2012, Buenos Aires has offered its impoverished writers a pension. To qualify you must have five books published and be an Argentinean national. Alberto Laiseca, 71, a writer of horror fiction, is one of 80 writers to receive the pension, the New York Times noted. It can reach almost $900 a month.

Unfortunately there are no plans to introduce such a unique scheme here. But many self-employed, part-time Irish writers and authors, of which I’m one, have no pension scheme.

There is a major problem coming down the tracks for people like us. Noel White, a financial broker with planalife.ie in Athlone, says , ‘I think it is common knowledge at this stage that we as a country are facing a pensions time bomb where the amount of people drawing the state pension will outweigh the tax intake coming from the workforce’.

Maura Howe, of the Pensions Authority, writing in the Sunday Business Post (‘Eleven tips to get to grips with retirement saving’, 11 October 2015), explains there are three main types: an occupational pension scheme; a Personal Retirement Savings Account (PRSA); and a Retirement Annuity Contract (RAC).

Because of the irregular income of many Irish self-employed writers, financial experts such as Susan Hayes believe the best option for writers is the PRSA. The PRSA, she writes ‘is ideally suited to the irregular nature of writers’ income streams’. ‘It is the ideal pension savings plan for self-employed people’. (‘Financial expert Susan Hayes asks do writers ever retire?’);

Here are the basic facts from the Pensions Authority website (‘Personal Retirement Savings Account: A Consumer and Employers Guide to PRSA’).

A PRSA is an investment account that you can use to save for your retirement. The scheme is not guaranteed by government. There is a level of risk as your account can increase or decrease in value.

There are two types of PRSA, standard and non-standard. A standard type invests in pooled funds – company shares (equities), bonds issued by governments (sovereign bonds), bonds issued by companies (corporate bonds), property and cash – and has maximum charges of 5% on the contributions paid and one percent per year of the fund value. Non-standard does not have these charges, but allows investment in funds other than pooled funds.

You should decide what type of funds to invest in. If you don’t, PRSA’s have a default investment strategy (DIS). The DIS is not risk free, in fact, it will invest in higher risk funds in earlier years, moving to middle-risk in later years and low risk nearing retirement.

There is a minimum amount you must pay in, but it is very low. So that even if you are having a bad year you can still keep your account alive. The minimum amount is €300 per annum. The advantage of the scheme for self-employed writers with fluctuating incomes is that you can stop, start, increase or decrease your contributions at any time. You can make contributions sporadically, monthly, quarterly, half-yearly or weekly.

Every six months you will receive a report from your PRSA provider. You can start getting your benefits between 60 and 75. Your fund at retirement will consist of your total contribution plus the investment return earned on those contributions, less your providers charges.

At retirement you can take a lump sum of 25% and use the balance to buy an annuity – a payment for life at stated intervals, purchased from a life assurance company from your pension fund – or leave the balance and withdraw it at any time.

To get a list of reputable PRSA providers go to the Pensions Authority website.

But suppose you invest in a PRSA too late and only end up with a small sum? According to the Department of Social Protection, Sligo, you can still claim the non-contributory old age pension to top up your PRSA contributions. Unlike the state contributory pension, however, the non-contributory pension is means tested, so that any income you receive, such as cash from land rental, and whatever sum you are getting from your PRSA, not to mention royalty from your books if you’re lucky enough to be receiving any, will all be taken into account.

But according to Noel White, ‘It is never too late to fund for retirement; the percentage of income that you can contribute to your pension and obtain tax relief on increases as you get older. Depending on your age you can save up to 40% of your personal income into a pension and claim full tax relief’.

And at least the record will show you tried.

Further details:

Pensions Authority: 01- 6131900

Dept of Social Protection, Sligo: 071 9157100

Revenue Commissioners 01- 6131800

Information booklet of the PRSA: click here

(c) Roy Hunt

Roy Hunt is a member of the Irish Writers Union, which was set up to provide advice, guidance and support to writers in Ireland.  The Union works on behalf of Irish writers to achieve better remuneration for writers and to advance the cause of writing as a profession. For more information visit www.ireland-writers.com

About the author

About Roy Hunt

After a site accident in 1993 I began writing in my spare time. I have an M.Litt from NUIG and turned my thesis on Roscommon into a 120,000 word book.

My first work of Fiction, ‘Transmutation’, is entered for the Irish Writers’ Centre Novel Fair 2016.

I have completed a second book about a psychic Catholic priest living in 1980’s Athlone. I also studied ‘From fiction to Feature’ with Journalist Sue Leonard of the Inkwell Writers’ Group and am currently researching an article on the shortage of HGV drivers in the haulage industry.

I joined the Irish Writers Union in 2012 and I am its current treasurer. A great place for help and support! I’m presently working on a biography of my parents life, called ‘A Cruel Scenario’. The title comes from my father’s description of a working life without education.

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