New Buyout bond at age 64

C

Cricket

Registered User
Messages
5
I am a deferred member and my DB scheme closed 18 months ago. I have been given the usual options for the transfer value, and the applicable 2 options for me are buy out bond with my choice of provider or default provider Irish Life.

The transfer value was about 15 times the annuity promised by the DB scheme. I will be 64.2 years on the date I have to present my choice of buyout bond provider, and I have no idea how long it will take to effect the transfer.

NRA is 65. The transfer value is over €400k. I have a few questions.

  1. Do I need to go the buyout route at all considering my age?
  2. Can I hold the bond beyond NRA in the hope of improved annuities or change of legislation?
  3. Am I wasting my time looking at alternatives for the default bond provider based on the short life of the bond?
 
Ask the trustees if you can mature the policy. As you are not 65, the may pay a slightly decreased amount. If they are winding up the scheme, they won't let you just leave it there.
Yep, just don't mature it.
Depends on whether you are going to mature it or not in 8 months time. You are not a particularly attractive customer to an insurance company (the rates they pay are based on the amount and term to retirement). There are plenty of self directed providers who don't have allocation rates, so they won't mind the term.

Your big problem is the lack of ARF choice.


Steven
[broken link removed]
 
SBarrett, I was imprecise in my start posting. The scheme was wound up 18 months ago. I assume this changes your coment on maturiing.
 
If you have less than 15 years service in the scheme you could perhaps transfer to a PRSA, in which case you would have the option to take 25% as a tax-free lump sum and invest the rest into an ARF/AMRF.
If that is not a runner then a buy out bond is your only choice. In the near term I don't see annuity rates improving. However you would not have to mature the BOB at age 65. You could defer having to buy an annuity. But by 70 you will have to buy an annuity. The rate might be slightly higher at that age, but you will have foregone 5 years income.
If you are forced to buy an annuity at retirement then I would negotiate with Irish Life around the entry cost to the BOB, I.e. no upfront charge.
 
Hi Cricket,

Can you check if the old DB pension scheme was transferred to a defined contribution (DC) scheme and if so can you transfer your benefits to the new DC scheme? If you can this gives you the benefit of the ARF or annuity option and you should closely consider what option suits you best taking both tax free cash and retirement income into account.

If your only option is a buy out bond then unless as Conan says and you can afford to leave the funds in the Buy Out Bond for at least a couple of years, its probably not worthwhile checking around for better value in the BOB, but, and this is a big but, check what net allocation rate you receive on the way in and if there are any charges when you take the funds out to purchase an annuity.

In addition make sure you shop around re the annuity rate you get from the BOB, there are several providers and rates can differ. A good adviser can do this quickly for you so dont just take what Irish Life or the scheme trustees offer until you have price checked the alternatives. Also take the time to price what you want re the annuity i.e inflating or not and if a spouses pension is required etc. as these all influence the annuity rate.

If you can get the ARF option then this could be really beneficial to you as you can gradually move funds from an ARF to an annuity as you get older and you get higher annuity rates the older you are ( all other things being equal). Ask an adviser for an indication as to how annuity rates increase as you get older. Whatever you do make sure to shop around for the best value annuity. All the best Vincent
 
Thanks for adding that link Joe. Interesting reading. A review aimed at "rationalising provision in this area"?? Successive governments have do nothing but made pensions more complex over the years. I can't seem them rationalising anything soon.


Steven
www.bluewaterfp.ie
 
You must log in or register to reply here.
Back
Top