early retirement from DB scheme

spalpeeno

Registered User
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On making enquiries re options for leaving early I've been told by a trustee of the DB scheme where I work that because schemes are generally in trouble the trustees hands were tied and not allowing anybody retire early. I was assured this was the case everywhere in all DB schemes and was told there was absolutely no way, without exception including ill health, to access pension until 65. Is this correct? Has the pension authority the right to issue such instructions even though there are provisions for early retirement due to ill health in the rules of the scheme? Bewitched, bothered and certainly bewildered!
 
This is untrue. Each DB scheme (in the private sector) is based on its own funding level. Some DB schemes cannot afford to pay early retirement benefits but some others can. The funding level of schemes varies. There is no instruction from any regulator banning the payment of early retirement pensions. It is down to each scheme to decide whether they can afford to fund early retirement.
I can only assume that your particular scheme is underfunded and therefore cannot afford to pay benefits early. But it is a decision for each scheme.
 
buddy of mine retired early and the penalty was 1/2% (Half percent) for every month he went before 65. ie, retiring at 60 meant a 30% reduction in pension, given that the 'normal' retirement age was 65.

The discount is fairly severe.

If you are considering going early, load up your AVC's as much as you can as these must also be taken at date of retirement.
 
This is untrue. Each DB scheme (in the private sector) is based on its own funding level. Some DB schemes cannot afford to pay early retirement benefits but some others can. The funding level of schemes varies. There is no instruction from any regulator banning the payment of early retirement pensions. It is down to each scheme to decide whether they can afford to fund early retirement.
I can only assume that your particular scheme is underfunded and therefore cannot afford to pay benefits early. But it is a decision for each scheme.

Thanks Conan. Yes the DB scheme I'm told is underfunded despite a recent Section 50 adjustment. An yes the employer says it can't retire people early from the scheme. However it seems the bar on early retirement is a crude instrument which isn't sophisticated to deal with a member who has no intention of drawing from the fund but simply wants access to his/her AVCs.
It seems very strange that an employee is made redundant over 50 but can't get assess to the money put aside foe such events.
 
If you have a specific AVC fund you can access up to 30% - subject to tax. But otherwise you can only access your pension and AVC pot when you actually retire from the main scheme.
 
The AVC's are part of the pension scheme. Early retirement is completely at the trustee's discretion. They have to take the benefits of all the members into account when allowing early retirement. What if everyone wants early retirement? It would be a massive drain on the fund.

It does seem unfair that you cannot access AVC's which are in a DC arrangement but those are the rules of occupational pension schemes in Ireland.


Steven
www.bluewaterfp.ie
 
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