Pension Access at 50 - how much is allowed.

mactheknife19 · 02-04-2023 8:31am #1

Looking for an answer here

I'm coming up to 50, and I've an old pension (left job 6 months ago). Approx value is 280k. I'd like to access some of that for home improvements / clear mortgage. My understanding - open to correction is that over my lifetime I can take 200k Tax Free in Lump Sum(s). But I'm also reading that at 50 I can only take 25%.

So,

At 50 can I only get 70k - or up to 200k
If only 70k, when can I access the 130k difference.

For clarity people my wife has a larger pension then I which will be be funding our retirement. And I will be working in a pensionable job for next 10 years.

Jim_Hodge · 02-04-2023 8:42am

You need to check the terms of the pension with the pension provider. They vary.

micar · 02-04-2023 8:45am

You need to ask for retirement options.

You'll be given options based on 1) salary and service route and 2) 25% lump sum and balance to ARF or taken as taxable cash

Everyone has a €200k tax free lump sum cap....however the lump sum calculated under 1) above maybe less than €200k.

1) is calculated based on your period of service and final salary.

Jim_Hodge · 02-04-2023 8:53am

You may not be able to draw down at 50 at all, depending on the fund. Just check with them.

mactheknife19 · 02-04-2023 9:06am

Thanks. I will speak to the provider. Just an

additional question before that. There was a redundancy payment of approximately 80k. Is the tax free implications that go along with that be calculated in anyway in the lifetime 200k.

micar · 02-04-2023 11:21am

https://www.boards.ie/discussion/comment/120430270#Comment_120430270

OK....redundancy poses a question..

When you took redundancy.....you were given the option to take an enhanced payment.

The enhanced payment is effectively the early payment of your lump sum entitlement.

If you took this enhanced payment....you are not allowed to take a further lump sum.

You need to look at the option you took when you left.

Where is your current pension assets .....in the company pension scheme or in a buy out bond?

mactheknife19 · 02-04-2023 11:57am

Yeah it’s in a Bond. I’d have to revisit the redundancy piece. Off the top of my head I just took the option to end up with the most lump sum cash so nothing extra went to the pension which I think was the option

micar · 02-04-2023 12:06pm

https://www.boards.ie/discussion/comment/120430709#Comment_120430709

The Bond proposal form which has been signed off the scheme trustees will have a question along the line.....

Has the right to a lump sum on retirement been waived?

If answered yes....then you are not entitled to any tax free lump sum.

Can you remember the redundancy terms.......how may weeks for each year of service, how many years service and salary used to in the calculation

Trigger Happy · 02-04-2023 12:16pm

Make sure you fully understand the implications of dipping in to your pension pot now. You don't have a large pot and with limited time to go to retirement you should have a plan and goals for pension at retirement. . Be sure, that if you dip in now, that your goals are still achievable.

mactheknife19 · 03-04-2023 8:06am

Thanks Micar for the questions. To be honest I wasn’t given a true view of the picture from the start as I thought I was making it easier to get a quick answer. And your replies show I need to understand the redundancy part first which actually is not for another 6 months.

So the actual reality is I’ve spoken to management and we’ve agreed that I will stick around to end of summer before I will be made redundant. The terms will be along the usual line as 2 weeks statuary plus 4 weeks for every year. By then I will have 22 years. End salary will be approx 70k. So far I’ve been given no paperwork to look at the numbers / options. I struggled to use some of the calculators to get a approx number.I know their will be an number of options ( some which are more tax efficient in the long term), but I was really looking for the best options to get the largest cash pot in the short term. So I was thinking my redundancy pot and the getting some from an early pensions realise. But maybe it’s not possible to get the pension piece ( I thought 25%) if I’ve already got the redundancy.Sorry for the confusion

FishOnABike · 03-04-2023 8:43am

On the redundancy payment - it's not unusual for that to be capped at some multiple of your annual salary. Depending on the cap it might not be the same as a simple multiple of your pay.