Hopefully one of AAM pension gurus will give me some advice on this. I’ll be 65 in a couple of week’s time. I have an Aviva Buy out Bond and I need to decide what to do with it. Here’s the facts:
Any advice would be much appreciated.
- I’m single with no children and own the house I live in.
- I’m self employed (sole trader) for the last 13 years, since my career job ended, but in reality I only earn pocket money from what I do (it’s more like a hobby) and so have paid very little income tax in last 13 years. Largely I live off savings (I cash in some of my State Savings when I need money).
- I have private health insurance and have good health (despite being a light smoker).
- My annual living expenses are €14,000
- Not taking account of any unforeseen costs, I won’t run out of money for another 14 years and so I won't need to access the Buy Out Bond money until then.
- The Aviva Buy Out Bond is in a level 5 risk (level 7 is highest risk) and is currently valued at €153,000
- Do nothing. Leave the €153k where it is for the next 10 years until I’m 75 at which point I have to make a decision on what to do with it.
- Transfer the money into an AMRF and maybe take 25% in tax free cash now and possibly draw down 4% p.a. (max allowed) until I'm 70 and then 5% until I’m aged 75. At that point the money transfers into an ARF.
- Transfer the money into an ARF now. An ARF gives more flexibility in terms of how much you can take out of it, as needs be, but I don’t believe this is an option for me as I don’t think I’ll have a guaranteed minimum income of €12,700. The pensions section of DSP will not be able to tell me what state pension I’ll be untitled to until I’m 66.
- Leave it where it is until next year when I’m 66 and know what my guaranteed income from the state pension will be and whether I can put it into an ARF.
- There are other options, such as the Annuity, but I don’t think these are realistic options for me.
- When I finished education I went travelling abroad for a couple of years. On returning to Ireland it was very difficult to get a proper job. So it wasn't until 1982 that I started paying regular income tax.
- In 1992 I gave up the PAYE job and became self employed in a start-up business. After 3 years, in 1995, I ran out of savings and had to go back into a PAYE employment as a sales executive. So there was a 3 year gap in contributions.
- In 2008 I lost this job and so took up the sole trader "hobby" job referred to at the beginning.
- In 2008 my final pensionable salary was recorded as €45,000 and I made no additional contributions after that.
- In 2009 the pension plan of the company I had worked for was wound up and transferred into a Personal Retirement Bond with Hibernian Life (now Aviva).
Any advice would be much appreciated.