possible to cash in a pension

Logical_Bear

is it possible to cash in a private pension?

Henry Ford III

A personal pension? It's generally possible from age 60 onwards, and only before then in the event of serious ill health.

IPI2023

It is possible to cash in a private pension.

Firstly, you can cash in any pension at any age if you are seriously unwell. You will need a letter from your doctor confirming your serious ill health before access will be granted by your pension provider.

Under normal circumstances, you can cash in a personal pension from the age of 60 however if there have been employer contributions you may be able to access your pension sooner at age 50. An employer may have made contributions to your personal pension if the employer did not offer an occupational pension scheme at the time. This can also occur when a business owner pays contributions to their pension directly from their company account.

AndrewJRenko

What age are you?

Henry Ford III

https://www.boards.ie/discussion/comment/120771987#Comment_120771987

A few inaccuracies there.

Access to a personal pension before age 60 is only granted in the event of serious ill health. I've handled a couple of these and it's not a question of submitting a GP's letter. Serious ill health means a life limiting condition in this context.

An employer cannot contribute to a PPP.

Lastly I note you are a new account. Advertising here isn't allowed.

IPI2023

https://www.boards.ie/discussion/comment/120776214#Comment_120776214

Hi Henry,

The information I have provided is correct. An employer can contribute to a private pension (RAC & PRSA). Please see below directly from the Irish Pension Regulator (The Pension Authority website). In some cases, this can enable access to be granted from 50 as it can be considered under the occupational pension rules.

Also, I took for granted that someone reading the post would understand that to access their pension early under ill health that they would need to be seriously ill. On re-reading, I can see it could be interpreted otherwise. I will rectify this now. I was not trying to suggest someone with a minor illness could access their pension, I do apologise if this was misleading to anyone.

To confirm in many cases (not all) you can access your pension early under ill health grounds if your illness prevents you from continuing to work in the industry you have worked in. For example, a builder may access his pension if he is no longer able to complete manual work.

AndrewJRenko

https://www.boards.ie/discussion/comment/120776214#Comment_120776214

That’s not true. I ‘retired’ in my early 50s to get access to an AVC fund from a previous employer. The age 60 rule you mention applies to the current employer in some cases, but not to funds with previous employers.

mazdamiatamx5

https://www.boards.ie/discussion/comment/120843670#Comment_120843670

Can I ask you, is the amount you are allowed to encash at 50 limited to 25% of the pension? I am looking to access at least part of my pensions from previous employers when I hit 50 which is in a few months.

Unknownability

https://www.boards.ie/discussion/comment/120843693#Comment_120843693

Do you mean how much you'll get in cash?

One of the key rules you must take all your benefits from a scheme at the same time.

AndrewJRenko

https://www.boards.ie/discussion/comment/120843693#Comment_120843693

The fund being cashed in was a fairly small amount in pension terms, about €10k, so I took the whole fund as a lump sum at the time. There was no discussion about any 25% limit.

mazdamiatamx5

https://www.boards.ie/discussion/comment/120843707#Comment_120843707

Sorry, I don't get you. My understanding is that I can encash a maximum of 25% of pensions from previous employers leaving the remaining 75% in some kind of a fund which I would not be able to access until retirement age of either 60 or 65 (I forget which) is that correct?

Unknownability

https://www.boards.ie/discussion/comment/120843719#Comment_120843719

Yes, you can do that or buy an annuity with the balance.

Depending on the size of the fund and the size of all your another pension assets, other options of accessing the entire pot (after tax) could be one to you.

mazdamiatamx5

https://www.boards.ie/discussion/comment/120843725#Comment_120843725

Essentially I have approx 160k in two pensions from previous employers. Am I correct in stating I can encash 25% of both at the age of 50 (which would be approx 40k, give or take) and put the rest into an annuity which would pay me an income? With regard to the annuity, would it have to be spread out over 15 years (50 to 65) which would give an income of only 8k a year or so? As I'm currently on social welfare (though I certainly don't plan to remain so for the rest of my life) I would have to declare the 8k a year to the social welfare and accordingly the social welfare payment would be correspondingly reduced, I think.

40k would give me a chance to set up a business and possibly move away from Ireland and certain toxic familial relationships, but I must admit I would rather access the full pensions, or perhaps more than 25%, but I'm not sure if that is possible.

Unknownability

https://www.boards.ie/discussion/comment/120843734#Comment_120843734

Everything you've said is pretty much correct, except that you'd get the annuity for the rest of your life rather than an a defined period.

Rather than taking an annuity you'd also have the option of taking an AMRF/ARF which means after the 25% the rest would remain invested and you'd receive an income.

Best talk to someone, either Pension Administratior you have will have people that you can speak with. Best to get multiple opinions or pay someone.

MerlinSouthDub

You have 2 options, broadly speaking:

1) take a tax free lump sum of a maximum of 1.5 times final salary (if you had at least 20 years service) and buy an annuity with the amount remaining. The annuity must be a lifetime annuity i.e. it will be a guaranteed amount payable for the rest of your life. The amount paid is taxable.

2) take a tax free lump sum of 25% of your pension fund and invest the balance in an Approved Retirement Fund. You can drawdown amounts from your Approved Retirement Fund as you wish, but the drawdowns are taxable. You can drawdown the full amount of your Approved Retirement Fund straight away if you wish (paying tax)

If you are on a means tested social welfare payment, then the cash amounts above will be considered in the means test and could reduce your social welfare payment to zero I guess.

You will get more detailed answers on askaboutmoney.com, I'd imagine.

Henry Ford III

https://www.boards.ie/discussion/comment/120843670#Comment_120843670

It applies to PPP's as I previously mentioned.

AndrewJRenko

https://www.boards.ie/discussion/comment/120845100#Comment_120845100

What's a PPP?

Henry Ford III

https://www.boards.ie/discussion/comment/120845646#Comment_120845646

Personal Pension Plan.

AndrewJRenko

https://www.boards.ie/discussion/comment/120845764#Comment_120845764

Clearly it doesn't apply to all personal pension plans, given that I got access to an AVC fund from a previous employer in my early 50s.

fergald

Ok my advice is to be careful and read your pension statement. Then request a leaving service statement to see your options. I was advised to take 25% + annuity or arf. However I noted that my contributions where avc. I worked for 16 years for this company so I was able to draw down roughly 75% of the fund tax free and invest the rest in an ARF up to 200k. I was lucky I spotted this. This is allowed if your contributions were AVC. You can do this and I have done it in the last two weeks.

take a tax free lump sum of a maximum of 1.5 times final salary.

The J Stands for Jay

https://www.boards.ie/discussion/comment/120843670#Comment_120843670

Doesn't apply to personal pensions.

The J Stands for Jay

https://www.boards.ie/discussion/comment/120846034#Comment_120846034

An AVC is not a personal pension plan.

AndrewJRenko

https://www.boards.ie/discussion/comment/120848709#Comment_120848709

What’s your definition of personal pension plan please?

The J Stands for Jay

https://www.boards.ie/discussion/comment/120848779#Comment_120848779

It's Revenue's definition:

"The legislation governing retirement annuity contracts (RACs), often referred to as personal pensions, is contained in sections 783, 784, and 785 to 787 of the Taxes Consolidation Act 1997 (TCA)."

Henry Ford III

https://www.boards.ie/discussion/comment/120846034#Comment_120846034

It does.

The issue is that you weren't in one. You were in an occupational pension scheme.

Rules are quite different for both. Totally different legislation.

AndrewJRenko

https://www.boards.ie/discussion/comment/120849425#Comment_120849425

Might be helpful to clarify that distinction for the OP

Henry Ford III

https://www.boards.ie/discussion/comment/120854867#Comment_120854867

Might be a better idea to stay away from technical threads on pensions that you're clueless on.

AndrewJRenko

https://www.boards.ie/discussion/comment/120855672#Comment_120855672

In fairness, I was able to inform the OP that he may be able to draw down his pension from age fifty, something that the “experts” seemed to have missed.

gameoverdude

https://www.boards.ie/discussion/comment/80602250#Comment_80602250

50

Henry Ford III

https://www.boards.ie/discussion/comment/120857058#Comment_120857058

No 60. Please read the thread fully.