Pension withdrawl

sunnyday1234

Hi

Is there anything stopping me withdrawing all my pension fund in one go (besides being taxed) upon retirement ? Are there any rules to withdrawls?

micar

What type of pension product do you have...personal pension, PRSA, Buy Out Bond or occupational pension scheme

Jim_Hodge

It depends on what type of pension you have. Have you asked your pension provider?

sunnyday1234

https://www.boards.ie/discussion/comment/119647599#Comment_119647599

its a company pension scheme, i havent asked the provider yet . I just wanted to know if there was any set rules

micar

https://www.boards.ie/discussion/comment/119649233#Comment_119649233

How old are you and have you left the employment related to the company pension scheme?

sunnyday1234

https://www.boards.ie/discussion/comment/119651080#Comment_119651080

Yeah i have one scheme where i am no longer an employee and another scheme for my current employment. I am 42 , i just want to know when i turn 68 and receive the state pension is it possible to remove as much of my pensions as i like ? Or is there a max per year you can withdraw

coylemj

https://www.boards.ie/discussion/comment/119651147#Comment_119651147

You haven't been following recent developments (up and down) in the qualifying age for the state pension. It's gone back to 66 and looks like it will stay there. For people born after 1960, it was planned to go to 68 but that was reversed as a result of pushback before the last general election.

micar

In relation to your previous employment scheme, the earliest you can drawdown is at age 50.

The max lump sum allowed would be based on your period of service and your final salary. This is the salary and service route. Any balance would be used to purchase an annuity.

It might be possible to take the balance as taxable cash under trivial pension rules but this depends on the value of all other pensions held once all lump sums have been taken into account.

At the moment, most people are taking 25% lump sum and balance to ARF or taken as taxable cash.

In relation to your current employment, it all depends on when you intend to leave.

There is a €200k lifetime limit for tax free cash. The next €300k is taxed @20% with amount over €500k taxed at your marginal rate.

sunnyday1234

buy my question is, if i draw down at normal age 66 and not early, is there anything stopping me removing all the pension in one swoop. At ages 66 and upon receipt of the state pension are there any rules on drawdown from pension or ARF if i have converted it to that

coylemj

https://www.boards.ie/discussion/comment/119654214#Comment_119654214

I don't believe there is. It used to be the case that if you did not have a guaranteed post retirement income of at least €12,700 then you had to put a minimum amount of money into an AMRF but the state pension has now overtaken that threshold so AFAIK there is nothing to stop you taking all of the money out.

But it makes no sense to do so because if you leave the money in an ARF, dividends and capital gains made by your fund are tax-free - it's only taxed when you withdraw money, known as a 'distribution'. If you take the money as a lump sum, you will pay 40% PAYE on most of it and you will end up with a pile of cash during a period of zero interest rates and rampant inflation - a lethal combination which will rapidly erode the buying power of your cash hoard.

sunnyday1234

https://www.boards.ie/discussion/comment/119654247#Comment_119654247

yeah i know it doesnt make sense. I just wanted to make sure there were no limitations on drawdown when i retire . I had the impression that you could only draw down 4% per year because this is what all the pension calculators show but of course they only show 4% because that implies the balance wont decrease . Its very misleading in fairness

micar

4% is the minimum that must be taken annually from an ARF. This only applies once you've been 60 for a full year.

Some clients may be liable to take 5% (over 71) and 6% (total value of ARFs exceed €2m).

There is no restriction on withdrawing more if you wish.

As previous poster said AMRFs and guaranteed income of €12700 per annum requirement is gone.

At the moment you can take 25% lump sum ( tax free to €200k) and balance as taxable cash.

As you've 20+ years to 66, the rules may have changed to what currently applies.

Ideally, members of Occupational Pension Schemes and those with Buy Out Bonds should have the option to take max lump sum under salary and service route and balance to ARF or taxable cash rather than having to purchase annuity . This would be in the event where lump sum here would be greater than 25%

This would just make it easier for everyone.

Very few people buy an annuity at open market rates.....the rates have been piss poor for the last number of years

coylemj

There is no restriction on withdrawing more if you wish.

micar, that's all the OP is asking. You've provided lots of high quality data on the ins and outs of retirement, tax-free lumps sums, ARFs etc. but that statement above is all the OP is looking for.