rollingstone
Registered User
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- 14
Hi All, being made redundant in the next few months. Aged 50, with 18 years service with this employer (multinational). Member of the occupational defined contribution scheme, projected pension fund value at end date is c €600k. This scheme is being transferred into one of those master pension schemes before I leave, not sure if that's relevant here. Not married, no children. Until recent times, I have not analysed pensions in detail as I guess it was something I considered to ponder later in life. But given the redundancy, it has prompted me to seriously assess all my financial matters and the pension topic is one that I still find very complex. It feels like a real fork in the road moment in life for me. Right now, my feeling is that I don't have an appetite to go back to the long hours of the corporate world, and I am also acting as carer for an elderly parent. I haver also been advised by recruiters that it will take me some time to find a new role, based on my age (not PC maybe, but I know people in similar situation and this has also bene their experience) Therefore I now want to make my pension work for me as best possible. I live in a modest house for which I cleared the mortgage this year from savings. My current outlook is that I would like to extract the maximum amount from my pension as early in life as I can so that I can enjoy it while I'm physically able, and to avoid excessive management fees that some pension funds seem to charge. I appreciate that pension is to provide for later in life. I'm prudent financially and would ultimately prefer to invest the money myself and maintain control over the investment types but also that I can cash in/out under my control. In that context I have the following specific queries that I would like your views on (I have been reading through the forum where there are excellent contributions on these topics so I hope to be as concise as possible here):
1. Waive the right to pension lump sum on redundancy settlement - I have been following the discussions here regarding availing of this 'loophole' whereby the pension is transferred to a PRSA. There appears to be conflicting views as to the risk of this process, so that's something for me to consider. Initial calculations from the redundancy settlement would mean that I would avail of a net increase of €16k if I signed the waiver. My initial feeling was this is a lot of money and was the way to go, but researching PRSA's and it appears that some funds have an annual management fee of 1% of the sum invested. This is a fair chunk to be taken every year from my savings every year, and has me reconsidering this option. This is ignorance on my behalf, but are these charges comparable to other pension options I might choose? Or are PRSA's generally considered an expensive route?
2. Buying an annuity - seems to be effectively a pension for life, taxable at the marginal taxes rate?. I believe I can select an option whereby remaining funds on my death can be distributed to dependants but this appears to incur additional charges to implement from the standard Annuity, therefore my feeling on this is a 'no'. If I have not considered something else for Annuity, please let me know.
3. ARF - initial assessment is that I can manage the fund, and make withdrawals as required, which are again taxed at the marginal rate. What are the advantages or disadvantages of this option?
My employer has told me that my options on leaving are to (a) stay in fund as a deferred member (b) transfer pension to new employer pension plan (c) Personal (buy out) bond (d) transfer to PRSA. I will also enquire if I can take early retirement under the plan, including drawing down a retirement lump sum amount. I assume most here would advise against that course of action, but I'd welcome your views.
Thank you for taking the time to read my post; any guidance you can provide would be enormously appreciated.
1. Waive the right to pension lump sum on redundancy settlement - I have been following the discussions here regarding availing of this 'loophole' whereby the pension is transferred to a PRSA. There appears to be conflicting views as to the risk of this process, so that's something for me to consider. Initial calculations from the redundancy settlement would mean that I would avail of a net increase of €16k if I signed the waiver. My initial feeling was this is a lot of money and was the way to go, but researching PRSA's and it appears that some funds have an annual management fee of 1% of the sum invested. This is a fair chunk to be taken every year from my savings every year, and has me reconsidering this option. This is ignorance on my behalf, but are these charges comparable to other pension options I might choose? Or are PRSA's generally considered an expensive route?
2. Buying an annuity - seems to be effectively a pension for life, taxable at the marginal taxes rate?. I believe I can select an option whereby remaining funds on my death can be distributed to dependants but this appears to incur additional charges to implement from the standard Annuity, therefore my feeling on this is a 'no'. If I have not considered something else for Annuity, please let me know.
3. ARF - initial assessment is that I can manage the fund, and make withdrawals as required, which are again taxed at the marginal rate. What are the advantages or disadvantages of this option?
My employer has told me that my options on leaving are to (a) stay in fund as a deferred member (b) transfer pension to new employer pension plan (c) Personal (buy out) bond (d) transfer to PRSA. I will also enquire if I can take early retirement under the plan, including drawing down a retirement lump sum amount. I assume most here would advise against that course of action, but I'd welcome your views.
Thank you for taking the time to read my post; any guidance you can provide would be enormously appreciated.