Pension when Company Closes Down

WarZoneBrother

Hi,

Possibly a stupid question but the company I started a pension for has closed its doors fully.

I talked with one of the colleagues I worked with and he said something about being able to claim the full amount with a 10percent cut early due to the business closing.

Just wondering is this actually a thing? It was a group pension scheme.

Padre_Pio

The pension should be held with a financial institution, can you contact them directly?

Peregrinus

https://www.boards.ie/discussion/2058306835/pension-when-company-closes-down

It's not a thing. Your money should be safe, but you don't get to claim it any earlier because the employer who contributed to it has closed down.

Buddy Bubs

You should have some paperwork from the pension company and you'll have the option to transfer it into your own name in something called a personal retirement bond or buy out bond. Or into a workplace pension in your new job if they offer it, when the time comes.

Contact them and go through your options. But the money you put in is not lost. Do you know who they are?

Be very careful about listening to colleagues, they likely have less of a clue than you. I've worked in the pensions industry and its complex, needlessly so, but still complex.

WarZoneBrother

Yeah I got letters stating my pension has been transfered to the aviva master Trust fund so that must be it...

Thanks for the help

ruddy1987

The company closing has no impact on your options with your pension (protected under trust law). You have the same options as you would with any deferred pension plan, that’s to leave it invested, transfer to another occupational pension or individual pension product, retire the benefit from 50 onwards.

The options at retirement will vary depending on the size of the pension pot. You will be entitled to a minimum of 25% as a lump sum (tax free assuming you have not waived your right to a tax feee lump sum as part of a redundancy or have already claimed €200k tax free lump sum) or possible more on the salary and service method. if you use the salary and service route and you have a small pension fund it may be possible to take the balance as a trivial pension at 10% (after the lump sum). I have included full details on trivial pension below. I would advise you to contact Aviva and ask them to send you a retirement option statement (provided you are over 50) which will outline your options.

What is a Trivial Pension?

This is an option available to clients who have very small pension funds at retirement and allows them take the balance of their fund after the retirement lump sum as a taxable lump sum.

What is the Trivial Pension Limit?

There are two ways a trivial pension can be provided:

Option A

Where the value of all the client’s pension funds after the payment of the retirement lump sum is less than €30,000 then the client can take the balance of the fund as a once off taxable payment.

Option B

If the total benefits payable from the relevant employment to a member does not exceed €330 a year then the balance of the fund can be taken as a taxable lump sum. In this case the calculation must be done before the retirement lump sum is taken and should be based on a single life annuity rate with no escalation.

This option is also available to those with personal pensions and PRSAs and is calculated based on the client’s total personal pension and PRSA benefit from the same period of employment or self-employment.

What tax is due on the Trivial Pension?

Under both options (a) and (b) above the client is entitled to their maximum retirement lump sum. However the balance of the fund is treated differently depending on which option the trivial pension is paid under.

Option A

If the trivial pension is paid under this option then the balance of the fund will be subject to income tax and the Universal Social Charge.

Option B

If the trivial pension is paid under this option then the balance of the fund will be subject to income tax at a rate of 10%.