Half of working people in Ireland wish they had started planning for retirement sooner. If that describes you, the more useful question is not why you left it late, it is what you can do about it now.
For anyone in their forties or fifties who quietly suspects they are behind, the answer is usually simpler and more powerful than they expect. It is called an Additional Voluntary Contribution, and the way the Irish tax system treats it makes it one of the most efficient catch-up tools available.
The New Retirement Reality, a 2026 study carried out by Amárach Research for FPSB Ireland, IOB, LIA and the Retirement Planning Council of Ireland, surveyed 1,200 working adults. Two of its findings land hard for anyone who feels time has got away from them.
The first is that 51% wish they had planned earlier. The second is that 49% expect to work longer than they had hoped, purely to fund their retirement. Put those together and a pattern emerges: undersaving today has a habit of turning into working later tomorrow, not by choice but out of necessity. Add to that the 52% who worry their funds will not last, and the case for acting now becomes hard to argue with.
The report is also specific about timing. It flags the years between 45 and 55 as the stretch when structured, goals-based planning pays off most, because that is when you can realistically picture the retirement you want and work out what it will take to fund it. That decade is the catch-up window, and AVCs are one of the main ways to make the most of it.
If you belong to an occupational (company) pension scheme, an AVC is simply an extra contribution you make on top of your normal one, to build a larger fund for retirement. You choose the amount, it is invested alongside your existing pension, and, most importantly, it earns the same generous tax relief as any other pension contribution.
If you are not part of a company scheme, a Personal Pension or PRSA does exactly the same job. The principle does not change: put more in now, and let the taxman effectively cover a large slice of the cost.
This is where AVCs earn their keep for late starters, and it comes down to two features of the Irish rules.
Relief at your marginal rate. Pension contributions attract income tax relief at your highest rate of tax. For a higher-rate (40%) taxpayer, every €100 you contribute costs just €60 once relief is applied. For a standard-rate (20%) taxpayer, €100 costs €80. From there the fund grows free of income tax and capital gains tax. One caveat worth noting: relief applies to income tax only, not USC or PRSI.
The limits climb as you get older. Revenue lets you claim relief on a percentage of your earnings that rises with age, a design intended specifically to help older savers catch up. The age-related limits for 2026 are:
These percentages apply to earnings up to a cap of €115,000, and they count your existing pension contributions within them. So a 52-year-old earning €70,000 who is only putting 10% through their company scheme has plenty of unused headroom: they could top up with AVCs towards the 30% limit for their age and claim relief on the difference.
There is a helpful bonus waiting at the finish line as well. AVCs can increase the tax-free lump sum you take at retirement, up to 25% of the fund, with the first €200,000 entirely free of tax.
Return to that 52-year-old higher-rate taxpayer. Say they decide to put an extra €500 a month into an AVC. Because they pay tax at 40%, the relief brings the real cost down to roughly €300 a month out of their take-home pay. The full €500 still goes to work in the fund, month after month, growing tax-free until they retire.
Across the years left before retirement, that gap between what it costs them and what actually lands in the fund is exactly what makes AVCs such a powerful catch-up tool. Figures here are illustrative and depend on your own tax position and circumstances.
One timing detail is worth keeping in mind. You can usually make a contribution in respect of the previous tax year if you do it before the 31 October deadline and elect to have the relief applied to that year, which effectively gives you a second bite at unused relief.
The thread running through The New Retirement Reality is that clarity, acted on early, is what separates a confident retirement from a delayed one. The 45-to-55 window the report recommends is not about panic. It is about taking an honest look at the gap between where your fund stands today and the income you will want, then closing it deliberately while the tax reliefs and the years are still on your side.
You do not need to have planned flawlessly since your twenties. You need a clear picture of the gap and a structured way to close it. That is an entirely solvable problem, and AVCs are frequently the most efficient part of the solution.
At Riordan Financial we help clients work out exactly where they stand, how much unused tax relief they have available, and how AVCs or a Personal Pension can be used to close the gap before they stop working, all matched to the retirement they actually want.
If you suspect you are behind on retirement savings, contact Riordan Financial for a review. Visit riordanfinancial.ie to learn more.
This article is for general information only and does not constitute financial or tax advice. Tax treatment depends on individual circumstances and may change. Figures are correct as of 2026. Riordan Financial Brokers Ltd trading as Riordan Financial (C30375) is regulated by the Central Bank of Ireland.
