what to do with my pension?

peterjk

I am 25 and just left my job of 4 years and had a pension with them through a third party pension scheme, i paid in money and my job paid about the same and theres about 5000 in there according to the annual letter i got.
I had to join the pension when i was working for them as part of my contract but now im thinking of cashing it in as money is going to be tight for a while but i dont know if this is a good idea to do.
Is 5000 much in pension terms, i know next to nothing on the matter? im planning on getting a new job asap if i keep the pension can it be used in another pension scheme like transfering it to another company or the likes ?

Any help will be great I just dont want to make a mistake ill regret in a year or two.

MartMax

I might be wrong. If you withdraw and cash your pension of course there is possibly tax on it; just like you are getting salary paid. So says 20% of €5,000 would be €1,000 and deduct by any allowance or tax credit balance you have. Not sure about transferring the money to other provider.

Victor

I don't think you can cash it in, you can only transfer if to another account.

You can only access your pension when you retire (over 60?) or are terminally ill.

samo

it does depend on how long you worked for the company for, I left last job after 2 years and was able to cash it in but paid tax at about 20% I think (didnt get much mind you), anyone there longer had to transfer it to new pension with new company or could keep existing one.

I was with Invesco if that helps and they as I assume most pension companies would normally contact you about that you want to do

shoegirl

The deal is you can cash it in minus whatever tax you saved up to 2 years after starting the pension. Here's the caveat - if your employer contributed you normally lose their contribution if you cash it in.

Alternatively you can often move it into your new employers pension scheme. (Again normally minus the old employers contribution, but you don't have to pay any extra taxes).

After 2 years you have 2 options -
a) leave it in the original pension fund and you'll get it when you retire
b) Move it to you new employers scheme

The nice thing is after 2 years you get to keep all the contributions your old employer made.

Whether you move it or not should depend on 3 things:

1. If its under 2 years and then you can cash it in minus taxes if you want
2. If your new employer has a better scheme when it would work harder for you
3. Whether or not your new employer allows transfers from other schemes

You will need to discuss this with both your new and old HR people.

If you have less than 2 years and your employer contributed nothing, and you need the cash then cash it in if you like. There is one final option and that is AVCs. If you cannot put it directly into the new employers pension, but can still cash it in, if you put it in at a later date you get the tax savings back when you put it in as an AVC - additional voluntary contribution.

And if you cannot move it or cash it in, think of it this way, you can probably take it as a cash lump sum when you do reach the required retirement age. Even 5k will probably be a nice few euro in 30 years time!

Check out the pensions boards website and think carefully about it. If you owe 5k or more in variable rate borrowings you might be better off cashing it in and clearing your debts off or reducing them somewhat.

RainyDay

Note that 2 years is the maximum vesting period, i.e. the period after which you can no longer get back your contributions in cash less tax. It was reduced down from 5 years to 2 years a few years badk. Some pension funds have shorter vesting periods (or no vesting period), so you'll need to check out the details of your own scheme.

voodoo

This is interesting. I worked for a company for over 5 years and had pension contributions paid by said company, which according to a friend in the know, was quite considerable in terms of pensions.

I left the company over 5 months ago and have had trouble getting information from the Pension company as my previous company has gone through an acquisition and forms etc were all being filled out.

What I want to know is, if I leave this fund there (probably in the region of 20k), how can I find out how much I will get when I retire?

I have also looked at the possibility of putting these funds into a PRSA as my current employer doesn't have a pension scheme, but you end up paying fees for this. Dont know what's best to do... help :eek:

RainyDay

voodoo wrote:

What I want to know is, if I leave this fund there (probably in the region of 20k), how can I find out how much I will get when I retire?

You could use this investment calculator and assume a growth rate of say 6% to get a rough idea. Don't forget that inflation will mean that 1 euro will not have the same buying power when you retire as it has now.

voodoo wrote:

I have also looked at the possibility of putting these funds into a PRSA as my current employer doesn't have a pension scheme, but you end up paying fees for this. Dont know what's best to do... help :eek:

You'll probably find that you are paying some fees within your current employers scheme too. Financial institutions won't manage your money for nothing. You also have the option of transferring your funds into a 'buy out bond' with one of the financial institutions, who will invest the money on your behalf until you reach retirement age. Check out the fees involved in each of these options before you make a final decision.