Pension help

Wizzy2011

I have been made redundant and have been asked to choose from several options.

• You may transfer the value of the Retirement Account to an Occupational Pension Scheme of your current employer
• You may transfer the value of the Retirement Account to a Personal Retirement Savings Account with a PRSA Provider of your own choice
• You may transfer the value of the retirement account to a personal retirement bond with an insurance company of your own choice
• You may transfer the value of the Retirement Account to a Personal Retirement Bond with Irish Life Assurance Company to their Irish Life Personal Lifestyle Strategy PRB Fund selected aas the Default Fund by the Trustee
• If you are over 50, in addition to the above four options you could elect to receive immediate benefits by way of a tax free cash sum and or immediate pension

Just a little more info that may help, I am 50 years old and have roughly 50,000 invested in my 13 year pension. Thanks for any help and advice!

Liam D Ferguson

The first option is only relevant if you are in another pension scheme in a new job. The second option could possibly cost you money for a Certificate of Benefits Comparison unless the pension scheme of your previous employer is being wound up.

The fifth option may be of interest to you if you're strapped for cash at the moment. You can take early retirement, in which case you'd get a lump sum and then would have further options as to what you wanted to do with the balance.

Options 4 and 5 are basically methods by which you can get the fund transferred into your own name and can defer retiring until a later date. You can choose from a variety of funds from low-risk through medium-risk through high-risk. Lower-risk funds include some that will pay you >4.2% per year after all charges guaranteed for the next five years, if you're willing to lock up the fund for five years. If you're an experienced investor you can even choose to manage the investment of your fund yourself ("self-directed").

Hope this helps.

FernandoTorres

It will depend on your circumstances I suppose. As you say you are over 50 so can take early retirement. The tax free lump sum amount you will be entitled to will depend on your final salary and years service with the company. Therefore you may be able to take your full fund as tax-free cash now which may be good for you.

However if you are unable to take the full fund as tax-free cash due to low service/salary then you would have to purchase an annuity with the remainder which would be quite costly as at 50 you have a high life expectancy.

The best thing to do would be to request retirement options from the company and see what you are entitled to. This will help you make up your mind. Information on the other products you can transfer to can be found here: http://www.citizensinformation.ie/en/money_and_tax/personal_finance/pensions/

HowFinancial

All of the above are options.
Best option for you depends on what you are now doing, and plan to do over the next number of years.
Your options are: transfer the benefits to a Personal Retirement Bond, or leave them where they are (in the company scheme), or transfer to a PRSA, or take early retirement benefits. Also, if you are currently an employee in a new company you have the option to transfer benefits from old employer's scheme to new employer's scheme.
However, if the existing employer's pension scheme is "defined benefit" as opposed to "defined contribution" it is rarely worthwhile moving the benefits to a new arrangement as the employer takes onboard all of the investment risk. If defined contribution however, it is rarely worthwhile leaving the benefits where they are. Also, if defined contribution you should ensure your funds are in investment options that you are happy with.
If plan to continue working, and take early retirement benefits it is important to note that (excluding any tax free lump sum) your total income (i.e. retirement benefits and earned income) will be subject to tax.
Depending on the level of your final salary from your current employment you could potentially take the full €50k as a tax free lump sum now in the form of voluntary early retirement.
Finally, you should check if an MVA applies to any of your funds (dc schemes only). If this is the case you have a limited window to avoid the MVA.
Pros & cons for pretty much every option - suggest talking to a Financial Advisor, usually they don't charge for consultation.