Just turned 50 with Disability

D

dmoore

Registered User
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4
Hi , I have just turned 50 and have a somewhat small pension with Irish life through my ex employer (group scheme).

I was made redundant due to Disability 5 years ago and am currently in receipt of invalidity pension from the state and a small monthly payment from an income protection policy.

My pension fund is currently worth 48K and I am in the process of trying to access this via a (cash lump sum in lieu of pension) I have a couple of questions regarding this and was hoping someone on here could help. I'm sorry if this has been asked before I've trawled through many many posts but cant find the answers.

A: It's my understanding that I can access this lump sum due to the fact that I have been made redundant due to disability and I will never work again and Thanks to 2 years of battling with social welfare I have lots and lots and lots of documentation to prove same. Is this correct?

B: What percentage of my 48K will I be able to receive as a cash payment.(or how much am I likely to lose)?

C: Is this a tax free payment ? ( I have no other income or pension apart from what is stated above, additionally like most I'm up to my oxters in mortgage debt)

D: Presuming I can access this lump sum, Does anyone know how long this process normally take ?

E: Can my ex employer / trustees stop me doing this ?

Thanks in advance for taking the time to read

DM
 
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  1. Yes, you can draw down your pension earlier if it is due to ill health early retirement. Also, given the fact that you are 50 now, you can draw down your benefits anyway.
  2. You have two options, 25% of the value of the fund or as a percentage of final salary and years service. If you draw it down due to ill health early retirement, you can assume years service if you'd worked to retirement.
  3. You get your tax free lump sum and if there is left than €20,000 left over, you may take it as what is called a trivial pension and pay 10% income tax and take the rest as a lump sum.
  4. It will take a few weeks.
  5. The trustees have to sign off on it. They do have trustee obligations and if you have had to retire early due to ill health, there is no reason for them to refuse letting you mature your pension early.


Steven
www.bluewaterfp.ie
 
SBarrett said:
  1. Yes, you can draw down your pension earlier if it is due to ill health early retirement. Also, given the fact that you are 50 now, you can draw down your benefits anyway.
  2. You have two options, 25% of the value of the fund or as a percentage of final salary and years service. If you draw it down due to ill health early retirement, you can assume years service if you'd worked to retirement.
  3. You get your tax free lump sum and if there is left than €20,000 left over, you may take it as what is called a trivial pension and pay 10% income tax and take the rest as a lump sum.
  4. It will take a few weeks.
  5. The trustees have to sign off on it. They do have trustee obligations and if you have had to retire early due to ill health, there is no reason for them to refuse letting you mature your pension early.

Steven
www.bluewaterfp.ie
Click to expand...

Steven.
In similar position to dmoore.
52yrs of age on invalidity pension and like poster income continuance payed until 60 totalling 2/3 of my wages if I working. Can get by on this.
200k in pension fund. What would your opinion regarding pension. Leave it there?
 
SBarrett said:
  1. Yes, you can draw down your pension earlier if it is due to ill health early retirement. Also, given the fact that you are 50 now, you can draw down your benefits anyway.
  2. You have two options, 25% of the value of the fund or as a percentage of final salary and years service. If you draw it down due to ill health early retirement, you can assume years service if you'd worked to retirement.
  3. You get your tax free lump sum and if there is left than €20,000 left over, you may take it as what is called a trivial pension and pay 10% income tax and take the rest as a lump sum.
  4. It will take a few weeks.
  5. The trustees have to sign off on it. They do have trustee obligations and if you have had to retire early due to ill health, there is no reason for them to refuse letting you mature your pension early.

Steven
Click to expand...

Hi Steven
Thank you so much for replying.

your point 1. seems to indicate that I can access this fund (great)
your point 4. indicates that it should take a few weeks
and point 5. that the trustees should not have a problem signing off on this

Im confused still over points 2. and 3. still (I'm sorry not very good with this sort of thing)

May I draw the entire pension (48k) down as a lump sum ?
Or May I only draw a % of the fund? and 20k left over , and trivial pension (I feel so bloody stupid I can't get my head around this)

Could you please clarify

DM
 
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Hi Steven
I've been thinking about this and think I might have gotten to grips with some of it.

Would i be correct in assuming the following

Starting with a balance of 48K, I can draw down 25% (12K) as a lump sum.

This leaves 36K in the fund.
Again I can draw down this 36K but will have to pay standard rate of tax on it (I think currently 20%) so €7,200 in tax leaving me with approx €28,800
Add this to the €12,000 drawn earlier and I wind up with a total sum of approx €40,800

Am I anyway close??

DM
 
DCD ,
Steven is our ongoing pension man , but can I comment.

1. You are getting by on two-thirds until 60 , that is very good.
2. The longer you can hold off touching your pension pot ,the more it will give you.
3. Probably @60 you will go on State Invalidity Benefit (is that enough to live on for you?)
4. @60 you will not HAVE to take pension, it may make more money sense to put it into ARF (approved retirement fund) and try not to touch .
There are rules governing these things .

Try to think of the k200 as something not to be touched until necessary?

Could it be your bigger issue is having funding 60 to 66 ie until Contributory state pension kicks in.
If ? you can hold most of k200 until 66 , you will have Contributory + private pension.

Is there a good finance advisor near you ?
 
Hi DM

There are two ways you can draw down your pension:

(A) 25% lump sum. With the remainder, if your invalidity pension isn't over €12,700, you have to purchase an annuity or put the balance in a fund until you are 75. You can only take 4% from this fund until that age.

Or

(B) Take a lump sum based on a percentage of salary and years service (3/80th of salary for each years service). Purchase an annuity with the balance. If the balance is less than €20,000, you can take it as a trivial pension.

I would explore option B first as because you are going on ill health early retirement, all the years you missed and will miss due to ill health will count. The more years service you have, the bigger the lump sum.

You should get in touch with the trustees and tell them you want to go on ill health early retirement and to send you out your options. They will send you all the figures.

Steven
www.bluewaterfp.ie
 
SBarrett said:
Hi DM

There are two ways you can draw down your pension:

(A) 25% lump sum. With the remainder, if your invalidity pension isn't over €12,700, you have to purchase an annuity or put the balance in a fund until you are 75. You can only take 4% from this fund until that age.

Or

(B) Take a lump sum based on a percentage of salary and years service (3/80th of salary for each years service). Purchase an annuity with the balance. If the balance is less than €20,000, you can take it as a trivial pension.

I would explore option B first as because you are going on ill health early retirement, all the years you missed and will miss due to ill health will count. The more years service you have, the bigger the lump sum.

You should get in touch with the trustees and tell them you want to go on ill health early retirement and to send you out your options. They will send you all the figures.

Steven
Click to expand...

Hi I've been offline for a few days but want to thank you very much for the info, it has been extremely helpful
DM
 
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