Access Private Pension at 50 for Public Sector Worker

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gerryj

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Hi,

I am hoping to access an old employer's DB pension when I turn 50 next year and draw down 25% tax free. I am now a public sector worker and will be entitled to public sector pension at 65. I am wondering if receiving the 25% tax free sum at 50 will have an impact on what I can receive as a tax free lump sum when I turn 65? Will I still be entitled to a tax free lump sum of up to 1.5 times my final salary (less 1/40th for every year less than a full 40 worked etc.) or will the 25% sum drawn down at 50 be deducted from the lump sum I entitled to draw down upon retirement at 65?

Appreciate any and all advice.

Gerry
 
Public service and private pension lump sums are totally separate.

But if you only take the 25% tax free at 50 you have to draw down 4% of your remaining ARF from age 60, or if not you are taxed as if you are drawing down.
 
gerryj said:
Hi,

I am hoping to access an old employer's DB pension when I turn 50 next year and draw down 25% tax free. I am now a public sector worker and will be entitled to public sector pension at 65. I am wondering if receiving the 25% tax free sum at 50 will have an impact on what I can receive as a tax free lump sum when I turn 65? Will I still be entitled to a tax free lump sum of up to 1.5 times my final salary (less 1/40th for every year less than a full 40 worked etc.) or will the 25% sum drawn down at 50 be deducted from the lump sum I entitled to draw down upon retirement at 65?

Appreciate any and all advice.

Gerry
Click to expand...
The private pension lump sum will be taken into account on the calculation of your maximum lump sums but the public sector lump sum is unlikely to be large enough to be affected (unless you are making AVC contributions). The €200k tax free limit will be reduced by the amount of the private pension lump sum.

All of this will be moot if the trustees of the DB scheme don't allow early retirement.
 
Can a public service worker set up a private PRSA separately and access that at 60, and then keep their preserved public service Db pension until 65?
 
messyleo said:
Can a public service worker set up a private PRSA separately and access that at 60, and then keep their preserved public service Db pension until 65?
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No, all pension funds relating to an employment must be drawn down at the same time.
 
gerryj said:
Hi,

I am hoping to access an old employer's DB pension when I turn 50 next year and draw down 25% tax free. I am now a public sector worker and will be entitled to public sector pension at 65. I am wondering if receiving the 25% tax free sum at 50 will have an impact on what I can receive as a tax free lump sum when I turn 65? Will I still be entitled to a tax free lump sum of up to 1.5 times my final salary (less 1/40th for every year less than a full 40 worked etc.) or will the 25% sum drawn down at 50 be deducted from the lump sum I entitled to draw down upon retirement at 65?

Appreciate any and all advice.

Gerry
Click to expand...
Under DB schemes, the tax free lump sum is calculated as a percentage of final salary. You will also need to get trustees permission to draw down the benefits early, something that most trustees do not allow.

To take 25%, you need to get a transfer value from the pension and transfer it to a buy out bond. You are now in the defined contribution world and you can take the 25% tax free lump sum and transfer the remainder to an ARF.

It will not impact on your public service pension as long as the total tax free lump sums paid is below €200,000 (which will have to be taken into account whether you draw down on your pension next year or at 65). Any lump sum amount over €200,000 is taxed at 20%. Assuming the value of the old DB pension lump sum is below €200,000, the first lump sum will be tax free.

A lot of consideration should be taken before deciding to leave the guaranteed pension world of defined benefit pensions.

Steven
www.bluewaterfp.ie
 
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