Pension if retire early

Sarah1916

I have a pension with my job (through New Ireland). If I was to retire early (50 or younger) could I drawdown the €200k tax free lump sum when I turn 50 and still allow the remainder to compound until I’m 60?

I know I will have to have minimum €800k in the pension to be able to get the €200k.

I presume if I was allowed to take the €200k lump sum that the balance could not grow to more than €1.8m afterwards without being liable for penalties?

I am only in my 30’s but would just like to know that if I continue to max out my pension now it will be worth it!!

Jim_Hodge

You need to check the terms of your particular pension.

Happyhouse22

As said depends on individual pension rules

But theoretically should be possible to “retire” at 50 , take the lump sum and keep the rest in an ARF, then at age 60 yiu would have to start drawing 4% a year

Sarah1916

Ok thank you - I will request more information about my particular pension scheme.

homewardbound11

Is this a windup having 800k minimum in your pension in your 30s.

Happyhouse22

https://www.boards.ie/discussion/comment/121900120#Comment_121900120

Nah I think they mean having 800k by about age 50 - which I imagine is quite doable if you have a high salary, make the max contribution and experience decent growth.

Happyhouse22

https://www.boards.ie/discussion/comment/121900038#Comment_121900038

The main thing to find out is what type of pension it is, if it’s a pan occupational pension there should be no problem taking the lump sum aged 50 and then leaving the rest to grow.

amacca

What is a pan occupational pension do you mind me asking?

Sarah1916

I should have been clearer - if I had €800k in my pension already, I think I’d nearly retire now!! The aim is to have this by 50. I’m lucky to have a high enough salary and plan to max out annually if I can. I’m also invested into high risk funds which if it goes my way, over the long term (15 years approx.) should make me hopefully around 10% return. That’s how I’ve estimated having €800k+ by the age of 50.

masterboy123

Consider maximising AVC.

Nody

https://www.boards.ie/discussion/comment/121906787#Comment_121906787

Why would you accept 10% return average on a high risk fund? 10% is what you get from a standard global index/S&P500 fund and on top of that high risk funds tend to be expensive (1.5% - 3% annual fee) which then require an even higher return to offset the fee and the additional risk (an index fund should be 0.5% at highest and most are .1% to .2%).

Jim2007

Well we don't know what the OP has actually invested in nor their perception of risk...

The general consensus for a well balanced portfolio, including rebalancing is between 6% and 8%, so I think the projections are probably off in any case.

Sarah1916

I am invested in the Ifunds equities S12 fund which has an average return of 11.4% over the last 10 years and the Prime Equities S12 fund which has had an average return of 10.5% over the last 5 years. These have been categorised as high risk by New Ireland but they basically do track the stock market. I am hoping for similar returns over the next 10 years. Obviously that is no guarantee. I don’t have to retire early but it would be nice to be able to access my pension lump sum if I do decide to retire early. I have been reading up a lot about FIRE lately.

I’m paying 0.88% in charges annually.

Jim2007

https://www.boards.ie/discussion/comment/121910433#Comment_121910433

Just for clarification, is this the fund you are talking about: https://www.newireland.ie/view-document/302866-302866_iFunds_Equities_v29.01.24_(3960910).pdf

Sarah1916

Yes. That is one of them. I am 50% in that and 50% in this one:

https://www.newireland.ie/view-document/303344-PRIME_Equities_Flyer.pdf