What should farmers consider when planning retirement?
Teagasc has shared advice on retirement for farmers, focusing on asset transfer, pensions, and state supports such as the Fair Deal Scheme.
Hugh McEneaney, farm management specialist at Teagasc, outlined how taking simple steps when considering retirement will result in better outcomes for everyone involved.
He noted that farming is still often a family business, which can make retirement planning and asset transfers complicated.
However, there are key steps that can help farmers prepare effectively for retirement.
Planning asset transfer
McEneaney said that one of the most important considerations for retiring farmers is the transfer of assets.
He said: “Typically, farmers want to pass their land and business on to children or other family members to maintain the family name on the land or the family legacy.
“Early and clear communication within the family is vital to avoid disputes and ensure all parties understand the process.”
One increasingly common solution is collaborative arrangements, such as partnerships and share farming.
“This can be particularly appropriate if the successor isn’t ready to farm entirely in their own right or where the asset owner wishes to continue farming but at a less intense pace,” McEneaney said.
He also recommended drawing up a will, which, he said, “greatly eases the administration of your estate, ensures your intentions are met, and reduces stress for those left behind”.
Additionally, an Enduring Power of Attorney (EPA) allows a farmer to appoint someone they trust to manage financial and legal affairs if they become unable to do so, “ensuring the farm and finances are cared for during incapacity”.
The farm management specialist also recommended a “health care representative…appointed to make medical decisions on your behalf if you cannot express your wishes, protecting your health interests.
“Together, these legal tools provide vital protection for your farm, finances, and wellbeing in retirement and beyond.”
Additionally, McEneaney said: “Farmers should consult with agricultural advisers, accountants, and solicitors to arrange appropriate legal mechanisms for asset transfer, such as wills, trusts, or farm partnerships.”
There are also tax benefits for those that use this approach while still alive.
“Transferring assets gradually can also help younger farmers gain experience managing the farm before full ownership is passed on,” he added.
“There is a succession planning advice grant which covers a maximum 50% of the costs of professional advice to a maximum ceiling of €3,000 to help with the transfer process.”
Pension planning
McEneaney said that, traditionally, “many Irish farmers were not in a position to build formal pension plans and relied on farm assets for their retirement income”.
That said, with rising costs and longer lives, he said: “Farmers and their partners should explore options such as the state pension (contributory or con-contributory), and private pension schemes like personal retirement savings accounts (PRSAs) or self-employed retirement schemes”.
“With the increased cost of living, the state pension may not be sufficient to meet all the desires of retirees. An additional source of income may be required.
“This may be achieved through a farm income payment or leasing some land in order to fill the gap.”
McEneaney recommended contributing regularly to a pension, because it “can provide a steady income stream in retirement, reducing dependence on income from the farm”.
While it is advisable to start pension contributions as early as possible, the farm management specialist added that “even those close to retirement can benefit from independent financial advice”.
Fair Deal Scheme
The Nursing Homes Support Scheme, more commonly known as the Fair Deal Scheme, provides state support to help cover the cost of long-term care in nursing homes.
“Farm families may need to consider this scheme as they age, especially if one of the members’ health deteriorates beyond the point that the family can cope and residential care is needed,” said McEneaney.
“It is means-tested, taking into account income and assets, including farm property.”
An important detail is that entering the Fair Deal Scheme might affect farm assets.
McEneaney explained: “While the family home and farm may be included in the means test, certain protections exist, particularly if the farm remains in the family’s possession.
“Early financial planning can help mitigate the impact of these costs.
"The Fair Deal Scheme puts a charge of 7.5% on the assets for a period of three years, it also takes 80% of ones pension to pay towards the nursing home fees.
“Advice should be sought before applying for the Fair Deal Scheme," he added.
