25% tax free pension withdrawal at age 50

ClubMan said:
Link doesn't seem to work.

https://www.linkedin.com/in/dan-malone-374733b1?originalSubdomain=ie
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The video is on the 'about' part of the site, scroll down. It's all waffle.

About - National Pension Helpline

The National Pension Helpline was established as a free & reliable source of information for pensions in Ireland. We all know that we need to save for our retirement & putting money into your pension is the best way to do that.
nationalpensionhelpline.ie

Edit: removed like to someone of the same name
 
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ksmith169 said:
OK interesting. Does the the remaining 75% of first pension has to go into an ARF? So the new personal pension is a completely new pension.
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Yes

Edit: yes to the new personal pension being a completely new pension.
 
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I have a pension from an Irish company that I left over 5 years ago.
I am 51 and would like to access 25% and I seem to "qualify" for this.

However, I am confused about what happens with the remaining 75%.
Can I put into a pension fund so that the remaining 75% is like any other pension and I can draw down if/when I get to 68 or so?
Or am I considered to have taken early retirement and am forced to draw down earlier?
 
stevedublin said:
However, I am confused about what happens with the remaining 75%.
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See here:

Benefits payable on retirement - pensionsauthority

On retirement from a private pension arrangement you will have a number of options available to you. The decisions you take at this point will have a significant bearing on your financial security and that of your dependants. You should consider taking advice when deciding upon your retirement...
pensionsauthority.ie
 

If it's not a PRSA, then you'll need to reinvest the balance in an Approved Retirement Fund (ARF). You can leave the ARF untouched until the year in which you turn 61. From that yuear on, you'll need to take an income from the ARF, starting at 4% per year and increasing to 5% when you hit 70.
 
ClubMan said:
Would the options of buying an annuity or taking the balance as a lump sum subject to tax not also be available?
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Sorry - yes they would. When @stevedublin mentioned leaving the balance until 68, I assumed that he wants to hold off for as long as he can before drawing down the balance. But in the interests of completeness, I should have mentioned the alternatives also.
 
Interesting that this popped up, my YouTube premium has a problem and I’m getting YouTube ads currently. Being bombarded with ads for accessing old pensions at 50.
 
Yes, exactly.
I want to hold off on drawing down the balance.

Thanks for replies!

If I am forced to draw down 4%p.a. at 61, could I re-invest that into another pension until I get to 68?
 
ClubMan said:
No. The balance after taking the tax free lump sum will either be in a vested PRSA or an ARF and the 4% p.a. will have to be taken from the year in which you turn 61.
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but if I was still working from 61 onwards, I could increase my pension contributions from my employment into a completely different pension by the same amount that I would be drawing down from the old pension?

Right?
 
stevedublin said:
If I am forced to draw down 4%p.a. at 61, could I re-invest that into another pension until I get to 68?
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You can still make pension investments after age 61.

You would not get tax relief unless you still have earned employment.

The fact that you have drawdowns from an ARF doesn't prevent you from continuing in employment.
 
stevedublin said:
but if I was still working from 61 onwards, I could increase my pension contributions from my employment into a completely different pension by the same amount that I would be drawing down from the old pension?
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You could pay an amount into the new pension up to the value of your age related tax relieved amount.

This would be 40% of your earned income.

It would not be 40% of your earned income + your ARF drawdowns.

If you pay more than 40% of earned income you won't get tax relief on the surplus.
 
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Putting it another way...

  • At age 61 you can put up to 40% of your earned income into a pension and claim tax relief on it.
  • If you choose to use the income from your ARF to pay for some of this, that's up to you. You've already paid your taxes on it so you can do whatever you choose with it.
 
stevedublin said:
but if I was still working from 61 onwards, I could increase my pension contributions from my employment into a completely different pension by the same amount that I would be drawing down from the old pension?
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Sorry, I misunderstood and thought that you asked if you could stick the balance of your pension after taking the tax free lump sum into a pension and defer taking it until 68 and you can't do that. I see now that you meant using the pension drawdowns to fund a pension. Others have covered that scenario above.. Apologies for any confusion.
 
Setforlife said:
Interesting that this popped up, my YouTube premium has a problem and I’m getting YouTube ads currently. Being bombarded with ads for accessing old pensions at 50.
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In general, it's not something I recommend doing. Your pension fund was always intended to provide you with an income when you retire from working, with a lump sum put by to cover irregular expenses and bucket list items.

That said, there are exceptions to every rule and everyone's circumstances should be looked at. Maybe you have accumulated substantial pension benefits in subsequent employments and you know you'll have plenty when you stop working. Maybe you're paying high interest on loans and the lump sum from a pension pot could help you to clear off these loans. You could then put the equivalent of the monthly loan repayments back into your current pension fund with the benefit of tax relief.

But the lads bombarding you with ads are more interested in selling you an ARF.

I presume that you are over 50 and YouTube knows this from your YouTube profile.
 
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