A pension at it’s core is a simple long term savings plan that parents can get access to when they retire.

My big bug bearer is that the industry has taken a simple concept and made it more complex than space travel. The industry has also passed on ALL the risk to parents who are working hard to try and secure a better future for their family. If your pension goes up or down then the industry still makes money but they are unwilling to shoulder any of the risk.

Why is it important for parents of children with additional needs to have a pension?

From my experience I generally see one parent paying in to a pension that when that parent comes to retirement age then there may be 3- people living off the pension. That is both parents and an adult with special needs.

This is a great worry for me that if parents don’t have a comfortable retirement plan then this will affect the quality of life of young adults with special needs. Not only during their parent’s retirement but it will also affect the value of the estate that can be passed on to this young adult through the will and trust.

Carers also generally have very little pension benefits built up as they spend so much of their working lives being a Carer. They may also have large gaps in their social insurance records creating issues when trying to access the basic state pension. For those parent in this situation I would encourage you to investigate the Homemakers Scheme.

There are two basic pension schemes. Define Benefit or Define Contribution and all employers are legally obliged to provide employees access to one of the above schemes. It is not mandatory for your employer to contribute.

A Define Contribution pension is where you and your employer jointly contribute to a pension and the combination of these premiums plus any gains or losses to your pension investment will then cumulate to giving you a pot of money at retirement time.

A Define Benefit scheme differs in that when you reach retirement age your employer promises to pay you a set yearly pension depending on the years of service you have completed. There is no ongoing investment risk other than your employer closing the scheme or the scheme going in to liquidation which has been a common theme during the last few years of the recession.

The main benefits of pensions are that you are allowed to defer the payment of tax when contributing in to a pension. The fund is allowed to accumulate tax free without the deduction of any government taxes. You then have a number of options on how you can take your pension when you retire.

A major benefit for families who have a child with special needs is that while building up your pension it does not impact your access to entitlements. In other words, if you happen to build up a pension pot of 1-million (you wish!) then you can still receive your Carers Allowance. It actual helps you qualify for Carers Allowance because any contribution to your pension is a deducible expense when applying for Carers Allowance.

When meeting parents I often discover that their pensions has provisions that will pay out to a child with a disability upon the passing of the parent. This is a huge benefit that is rarely claimed so it is important that parents check the terms of their pension.

Entitlement & Pensions

When parents reach retirement age then a range of entitlement open back up to them. The reason for this is that their salary has stop and this allows them in certain circumstance to claim some or all of the following even if they never qualified during their working careers;

  • Carers Allowance
  • Carers Benefit
  • Respite Care Grant
  • Incapacity Child Tax Credit
  • Medical Card

I hope this article has helped you to rethink the whole pension area. As parents of children with additional need this area cannot be ignored. For any of my families please feel free to contact me to discuss any of the above points.