Leaving Service Options

Hi,

Apologies in advance. My pension knowledge is extremely limited.

I've changed employer since December 2014. I had a defined contribution Pension plan with my previous employer. It was invested in the Irish Life Consensus Fund. I've received a leaving service statement advising the value of the fund is €50k.

My new employer is setting up a PRSA for me which they will pay into. I will be meeting with an Irish Life appointed contact to discuss the details shortly. My new employer is a UK company and only have 3 employees in Ireland so the operation is too small to setup a corporate pension scheme here.


I'd like some advice please on what to do with the 50k pension.

My leaving service letter outlines my options as follows...


Deferment Option
You may leave your entitlement in the current plan to purchase retirement benefits. The pension income amount willdepend on investment returns and the price of purchasing a pension (referred to as an annuity) at the time ofretirement.

Estimated fund at normal retirement age: €169,772.00
Estimated pension at normal retirement age: €6893

It is important to note that these figures are merely estimates and are in no way guaranteed. Investment returns will vary as will the price of pensions(annuity rates). Also, you may decide to take your benefit atan earlier age. This

will change the estimates above.

OR

Transfer Option

You can transfer the value of your fund to the following:

An exempt approved pension plan with your new employer.
A personal retirement Bond (Buy-out-bond).


I'm not sure what is the best option for me? My knowledge of pensions is extremely limited so I'd like some independant advice please. I'd imagine the Irish life contact will try to talk me into transferring the fund as it's in their interest to do this! What the best option for me?

Thanks

one thing I would suggest you look at is when you can actually draw down on your existing pension. I know in my own case I have an employer pension from a previous company that I can take at 63 and I have not transferred that into a new employers scheme which I cannot draw on until I am 65

The PRSA is not an employer exempt scheme and they didn't give you the option to transfer it to one. Did you have 15 years service in the previous place? Even if you didn't and can transfer to a PRSA, you will have to get a Certificate of Comparison done up which costs €1,000 plus VAT.

A buy out bond is a pension specifically to hold retained pension benefits from an old employer pension scheme. It is in your name and you have control over the investment funds and which provider you use. You can also chose when to draw down the benefits, anytime from age 50.

The other option is to just leave it where it is. It will remain invested as is until retirement. You can switch funds if you wish by contacting the trustees and requesting that they do it on your behalf.

Under all company paid pensions, the option is there to draw down benefits from age 50 onwards. The reality is that most people can't afford to draw down their benefits at age 50 and it is not a good use of money. People let their fund continue to grow in a tax free environment until they stop working and draw down everything together.

Steven
www.bluewaterfp.ie

thedaddyman said:

one thing I would suggest you look at is when you can actually draw down on your existing pension. I know in my own case I have an employer pension from a previous company that I can take at 63 and I have not transferred that into a new employers scheme which I cannot draw on until I am 65

Click to expand...

Thanks! I will definitely ask that question.

SBarrett said:

The PRSA is not an employer exempt scheme and they didn't give you the option to transfer it to one. Did you have 15 years service in the previous place? Even if you didn't and can transfer to a PRSA, you will have to get a Certificate of Comparison done up which costs €1,000 plus VAT.

A buy out bond is a pension specifically to hold retained pension benefits from an old employer pension scheme. It is in your name and you have control over the investment funds and which provider you use. You can also chose when to draw down the benefits, anytime from age 50.

The other option is to just leave it where it is. It will remain invested as is until retirement. You can switch funds if you wish by contacting the trustees and requesting that they do it on your behalf.

Under all company paid pensions, the option is there to draw down benefits from age 50 onwards. The reality is that most people can't afford to draw down their benefits at age 50 and it is not a good use of money. People let their fund continue to grow in a tax free environment until they stop working and draw down everything together.

Steven
www.bluewaterfp.ie

Click to expand...

I had 10 years of service with my previous employer. I'm not sure I really want to transfer it into another pension. I may just leave it as it is to remain invested until retirement - is this considered a safe option?. I am 38 years old. So for someone in my situation which option would you advise?

They are all safe in the sense that they are invested in your own policy in a defined contribution plan.

It is a matter of how much control you want over the investment process. If you want to have your own investment strategy, you can transfer it to a plan in your own name. Group arrangements usually have quite a limited choice of funds.

Always keep your old employer up to date with your contact details so they can contact you.

Then there's the charges. What are you paying under the current arrangement and what can you get elsewhere.

Steven
www.bluewaterfp.ie

Thanks for that Steven. It gives me something to think about. Having control over the investment process is appealing as well as transferring it into a plan in my own name, and of course the charges are another area I'd need to look into. I left employment on 14/12/2014. Is there a specific period of time I need to make the of decision in?

You can do it whenever you want.


Steven
www.bluewaterfp.ie