Deferred pension question

mikehn

Hi All
I am a 62 year old guy with two kids in college, unemployed for the last three years and the prospects of getting something at my age are bleak.I worked with a multinational in the past for a few years, out of the blue I got a letter yesterday advising me that I am a deferred member of their pension scheme, current value 21k, they are offering me the option of transferring this to another scheme of my choice and are prepared to offer an additional 20% to sweeten the pot if I do elect to transfer. I unfortunately do not have another scheme so that is out. My query is is there any way to access these funds as money is desperately tight, the actual pension would be around 920 PA but by the time I qualify the kids would be out of college and my pressures would have eased. In the covering letter it states that the trustees are not permitting early retirement from the scheme. I have two weeks to respond but have no idea what way to go.
Any suggestions appreciated.
Thanks

3DataModem

Is it a defined benefit pension? If so (and you see in good health) then think very carefully before taking a transfer value now.

padjo5

Hi Mikehn. What is your retirement age within the scheme? Also, what transfer options were outlined in the docs you received?

mikehn

Thanks for the comeback guys.
I assume its a defined benefit as it quotes a figure of 940 PA once I reach normal retirement age 65. Health isnt the best, struggling with a few issues so not taking a long term view. The Son has been living on a very tight budget in college which I feel bad about and my Daughter should have gone last year but took a year out to work due to our financial set up. I really would like to ease things for them as they are great kids. My options are to leave the scheme sit, transfer to another scheme which I do not have or switch it to a personal retirement bond.
Thanks

padjo5

Mike, it's fairly apparent that you want the funds now indeed. Doesn't sound like it but is that scheme closing down ('winding up')?

Do you have any other pension arrangements from other sources?

Hsve you access to a Financial Planner or Advisor, you really do need 1to1 advice on this to make an informed decision....

PaulM1977

Hi Mike,

You definitely need to sit down with someone to go through this in proper detail, there are options to get at the funds but you should get impartial advice from a independent financial adviser.
You may assume it is defined benefit but it may not be, your health issues may allow you to get a better pension rate than if you had a clean bill of health and you have to look at what is being offered from all pension providers, if it is not a defined benefit plan i.e. it is a defined contribution plan.

Thanks,

PaulM

mikehn

Getting access to some funds for the kids is the aim, no the fund isnt winding down( I think) it's one of the largest irish multinationals in the world. I dont have any other pension alternatives. I guess that an adviser will have to be the way I will have to go. One of the options in the letter is transferring the value to a Personal Retirement Bond and I have been able to find out that Irish Life are being recommended in this regard by the company. If anyone has any experience of these bonds I would appreciate a heads up.
Thanks

PaulM1977

Irish Life may be recommended but they may not be the best option for you.
Based on your age they may not allow you to transfer in 100% of the value of your pension benefit, they may offer only 99% of the value. This may not seem like a big deal but other companies can give you 100% of it and it is your money, not theirs.

Retirement bonds can allow you access from age 50, but you may be subject to penalties if you do not invest it for at least 5 years, with some pension providers.

Thanks,

PaulM

Hani Kosti

Mike, few pointers here'
Is it a Defined Benefit or Defined Contribution scheme
What us the normal retirement age (from info you gave us I'd presume it's 65 but we don't assume in pension, we ask)
Is the scheme winding up (closing)

As Paul pointed out, Irish Life might be the option suggested by the scheme but not necessarily the best on the market

I would strongly recommend to discuss your situation with a financial advisor (bring your documents with you) who should recommended the best option for you

As your immediate need for funds is quite obvious, advisor will surely take this to an account while tailoring a plan for you

mikehn

Thanks PaulM
there will be no charges for this switch so I guess 100% will be going in, if I investigates the penalties that would accrue it would give me a good starting point before talking to anyone. Thanks for the comments as it is helping me to get a clearer picture in my head as to the questions i should be asking if talking to the company or an adviser.

mikehn

Thanks Hani Kosti
The company referred to (normal retirement age usually 65). With regard to the best company Irish life seems to be around for a long time and if I'm hopefully talking about leaving the funds for a relatively short period then performance may not be an issue.
Thanks

PaulM1977

No problem, but do ask if there are any exit penalties as you will be looking to get access to the benefits pretty much straight away.

Thanks,

PaulM

mikehn

Thanks all
I have decided to go with the Bond.
It would appear to be the best solution for my situation as I will probably have to dip in to it next year.
Your comments were really helpful as they gave me an idea what questions to ask when I got onto Irish Life, IE penalties, duration etc.
Thanks again

Henry Ford III

PRB is the way to go, and if it'll only be invested short term low charges and security are the priority I'd suggest.

At 62 early retirement is possible (take the cash now if you can?) but the rules of the originating scheme will still prevail.

The trustees have to sign off on the retirement claim I think.

PaulM1977

Best of luck Mikehn,

Bear in mind, you have a number of other pension providers out there, Aviva, New Ireland, Zurich, Friends First, Davy Select, Standard Life.

Check with each of them(and Irish Life) about Allocation rates, Annual Management Charge, Early Encashment Options, Any Possible Exit penalties as well as Enhanced Annuity rates which may be on offer due to your health situation. Also ask what commission they are paid and how they are paid this i.e. does it come from your funds or is it separate.

All the best

PaulM

Henry Ford III

Commission disclosure is a mandatory requirement.

The J Stands for Jay

Henry Ford III wrote: »

The trustees have to sign off on the retirement claim I think.

Once it's transferred out, you don't need to get the trustees to sign off on the retirement claim.

Henry Ford III

McGaggs wrote: »

Once it's transferred out, you don't need to get the trustees to sign off on the retirement claim.

Yes that's correct. The Trustees have to sign the B.O.B. application form.