Most flexible pension type

the O Reilly connection

Hi

My employer has offered me auto enrolment into the company pension scheme. However Im not sure. I heard there are better ones out there - pensions where you can access the money before you're 55.

What are people's opinions on the most flexible type of pension scheme?

The J Stands for Jay

All company pensions can be accessed at 50 of you've left that employment.

Buddy Bubs

Prsa

The J Stands for Jay

https://www.boards.ie/discussion/comment/122117176#Comment_122117176

PRSAs lack a bit of flexibility around retiring before 60. You need to be retired from employment to take benefits between 50 and 60.

Kurooi

Well normally the employer scheme gives you some matching contributions, in which case that's very useful.

Jim2007

https://www.boards.ie/discussion/2058351012/most-flexible-pension-type

Unless you are about 20 now, the chances of you having accumulated enough for retirement at 55 are not great and on top of this when you do get to 55 you will still have to finance perhaps an additional 15 years of living before reaching the state pension age meaning that early access to your pension fund is not a great criteria to select a pension fund to start with.

You need an actual financial plan that takes into account the normal pension fund rules, the employer contributions, the tax free income earned by the fund over the period plus a strategy to accumulate sufficient additional wealth to plug all the wholes until you reach normal retiring age. And realistically you probable need a share in a business or hold a senior position at a company that gives you serious share options, to guarantee achieving the objective.

The J Stands for Jay

https://www.boards.ie/discussion/comment/122119436#Comment_122119436

The plan also needs to take into account expected pre and post retirement spending.

the O Reilly connection

https://www.boards.ie/discussion/comment/122119436#Comment_122119436

Jim, my plan is to receive a take home pay of 12,570 a year. I will pay the rest into a pension fund. I will then set up a company, and instruct the pension fund to lend the money to the company I own.

Do you think it will work?

Geuze

https://www.boards.ie/discussion/comment/122158285#Comment_122158285

Is your employer going to contribute to the company pension scheme?

If so, it seems to make sense to join the employer pension scheme.

Peregrinus

https://www.boards.ie/discussion/comment/122158285#Comment_122158285

No. You won't find a pension fund admnistrator willing to accept your instructions. Pension funds are regulated entities and the regulations don't allow the fund members to dictate investment strategy to the administrators. For a fund of this kind investments must be made at arm's length, and there is a limit on amount that can be invested in an unlisted company (5% of fund assets or 10% of the company's share capital, whichever is the lower.) There are further restrictions that would apply to an investment in an unlisted company connected with a member of thefund.

Plus, of course, the amount of pension contributions that you can get a tax deduction for is limited as a percentage of your total earnings. Unless your gross pay is only modestly above €12,570, you won't have the tax capacity to make the contributions you are planning.

(Of course, there's nothing to stop you limiting your spending to €12,570/year, saving the rest of your (after-tax) earnings and in due course lending the accumulated savings to a company that you have set up. You won't get a tax deferral for doing that. On the other hand, you won't be subject to the pension fund investment regulatory regime that would prevent pension fund investment managers from investing the entire fund in an unlisted company belonging to a fund member.)

Jim2007

https://www.boards.ie/discussion/comment/122158285#Comment_122158285

That would be a NO. From a public interest point of view the entire pension system is designed to encourage people to save for their retirement and to ensure that wealth accumulates in the fund. So you'll that the entire process from contributions, management of the fund through disbursement is highly regulated and you will not be allowed to do what you're proposing.

Specifically, the investment strategy of a pension fund is governed by law, EU regulations, their employer's regulations, best practice and so on. So fund managers can't just go and invest in things they think are a good idea or because their client tells them to. If they did they would leave themselves open to legal action.

Henry Ford III

https://www.boards.ie/discussion/comment/122158285#Comment_122158285

No.