Maximising a low matured pension and low savings

J

JustEnough

New Member
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7
Personal Details

Age : 66


Income and expenditure

Annual income; €27,780 max (14k rent room, 13,780 state pension)

Monthly take home pay: €2,315

I am retired


In general, I spend what I earn.



Summary of Assets and Liabilities

Home value of €750,000, mortgage paid off last year

Prize Bonds: €47,000

Credit Union: €30,000


Defined contribution pension: €410,000 through one employer with 4 providers (3 insurance companies and €100,000 self-administered)

No borrowings. No other policies



What specific question do you have or what issues are of concern to you?

My pension and savings are not performing. My pension fund matured some time ago and the self-administered fund is in cash. I took redundancy in 2009 and waivered my rights to lump sum. Met an advisor about my pension some years ago and he suggested an annuity of ARF. I was hoping for more.

No urgent requirements for cash at the moment but I would like to get some home improvements done (bathroom).

What are my options? Benefit v risk? Could I transfer to a PRSA?


Regarding my savings, would appreciate some suggestions for a better return?

Thank you for taking the time to read this.
 
JustEnough said:
My pension and savings are not performing. My pension fund matured some time ago and the self-administered fund is in cash.
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What are the other pensions invested in?
What charges apply?
It wouldn't be any surprise if your pensions were not performing if they were invested in cash or similar low returns assets.
JustEnough said:
Met an advisor about my pension some years ago and he suggested an annuity of ARF. I was hoping for more.
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Those are really the only two options for retiring a pension. What else were you expecting?
JustEnough said:
What are my options? Benefit v risk? Could I transfer to a PRSA?
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A PRSA isn't going to address the performance issue necessarily. What the money is invested in and what the charges are are key.
JustEnough said:
Regarding my savings, would appreciate some suggestions for a better return?
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What's your investment timeframe for the cash?
 
JustEnough said:
My pension and savings are not performing. My pension fund matured some time ago and the self-administered fund is in cash. I took redundancy in 2009 and waivered my rights to lump sum. Met an advisor about my pension some years ago and he suggested an annuity of ARF. I was hoping for more.
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No, they won't be performing if the money is in cash. You will need to get it working for you.

Besides an annuity and an ARF, the only other option is to cash the money in and pay income tax and USC on it in one go. You would be looking at 48% top tax on that amount.

If you want to start generating a return, you have to take some risk with your money and invest in stocks and shares and bonds. They will go up and down in value, especially in the short term but will make money in the longer term.

A PRSA is just another pension. You will still be faced with the same issue of where to invest the money.

You should have enough money for the rest of your life, you just need to take a bit of risk with it.


Steven
www.bluewaterfp.ie
 
ClubMan said:
What are the other pensions invested in?
What charges apply?
It wouldn't be any surprise if your pensions were not performing if they were invested in cash or similar low returns assets.

Those are really the only two options for retiring a pension. What else were you expecting?

A PRSA isn't going to address the performance issue necessarily. What the money is invested in and what the charges are are key.

What's your investment timeframe for the cash?
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Clubman thank you for your reply, I have attached a summary spreadsheet of pension performance, which I hope is ok to do. You will see that 2 streams are not performing. I am unsure of the management charges. Pension is from one employment.

My questions ;
Can I treat the 4 streams separately and move the 2 non performing streams to a better performing fund (i.e. cash and New Ireland IRIS)?
Can I move them all to a PRSA and get 25% tax free?

Regarding cash, I could invest for 5 years +
 

Attachments

  • Pension performance.xlsx
    23.6 KB · Views: 20
JustEnough said:
You will see that 2 streams are not performing.
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This point has already been addressed above. Any underperformance is most likely due to the asset allocation selected.
JustEnough said:
I am unsure of the management charges. Pension is from one employment.
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You really should check the charges.
JustEnough said:
My questions ;
Can I treat the 4 streams separately and move the 2 non performing streams to a better performing fund (i.e. cash and New Ireland IRIS)?
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I presume that the existing pension would allow fund changes to be made?
Check with the pension administrators/intermediary.

Does the spreadsheet refer to a single pension with different fund allocations?
Or are these different pensions?
What sort?
Paid up occupational scheme?
Buy out bond?
Other?
JustEnough said:
Can I move them all to a PRSA
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It depends on the answer to the previous questions.
JustEnough said:
Regarding cash, I could invest for 5 years +
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How much "+"?
 
Are these buyout bonds from a former employer? If not, it might be worth investigating if you could transfer into a PRSA so the lump sum waiver falls away.

It’s possible that Buyout bonds will go at the end of this year and you could get to a PRSA that way.

As noted by other posters the reason for no return is that you are not invested.

You should either purchase an annuity or invest in an ARF with a reasonably high investment risk. Those are your only sensible options.
 
Marc said:
Are these buyout bonds from a former employer? If not, it might be worth investigating if you could transfer into a PRSA so the lump sum waiver falls away.

It’s possible that Buyout bonds will go at the end of this year and you could get to a PRSA that way.
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Does mean moving a deferred dc fund to s prsa means you can get 1/4 as tax free cash ?
 
ClubMan said:
What sort?
Paid up occupational scheme?
Buy out bond?
Other?
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Paid up occupational scheme.
Marc said:
Yes the waiver doesn’t follow to the PRSA so the lump sum comes back into play
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Thanks Marc, so if the waiver doesn't follow to a PRSA, I can move my dc pension to a PRSA and retain the 25% lump sum. Then drawdown using an annuity of ARF? Is this the only way the waiver doesn't follow a pension?
 
JustEnough said:
Paid up occupational scheme.

Thanks Marc, so if the waiver doesn't follow to a PRSA, I can move my dc pension to a PRSA and retain the 25% lump sum. Then drawdown using an annuity of ARF? Is this the only way the waiver doesn't follow a pension?
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Yes, but you do need a certificate of benefit comparison from an actuary. Also known as a money for old rope fee.

It’s relatively expensive and serves no purpose other than to allow the transfer under the current rules. The rules could change in the future as a result of a pension rationalisation so it really depends when you want to retire the benefits.
 
Marc said:
Yes, but you do need a certificate of benefit comparison from an actuary. Also known as a money for old rope fee.

It’s relatively expensive and serves no purpose other than to allow the transfer under the current rules. The rules could change in the future as a result of a pension rationalisation so it really depends when you want to retire the benefits.
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Thanks Marc, is the PRSA vehicle the only vehicle available to ensure waiver doesn't follow? Have you any idea how expensive the certificate of benefit is?
 
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