If permitted I have a question on an old DC pension too.
The value of the pension is just under 100k (98,900) and the last statement 2017 said that the annual pension would be 7250 pa, from normal retirement age which I take it is 65.
I was saying to my wife that she could take 25% of that pension now and put the balance into another pension and on retirement she could add all the pensions into one arf?
I dunno why I think this and would like clarification.
Her other pensions will be over 1.3m by the time she is 62 assuming a 5% growth which is about half that she is enjoying over the last few years.
I'd appreciate any thoughts as we are trying to get all of our financial stuff together and sent to solicitor as part of having our wills recently done.
Thank you and I agree with not taking lump sums now and we don't need it , but like always other "information " and the spectre of CAT when we are both gone, I said to her " our children will be almost our age in 30 years time and they can sort out their own taxes, afterall they aren't going to short now are they ".If she needs / wants the 25% of the old DC scheme now as a lump sum, she could take it. Out of the remaining €75,000 (ish) she could put the first €63,500 into an AMRF and put the remaining €12,000 (ish) into an ARF. Then when the time comes for her to draw her larger DC fund, she can take a lump sum from it and put the balance into the same ARF she already set up. I hope that makes sense.
That said, I'm not a fan of accessing lump sums from pensions early unless there is a sound financial reason for doing so, e.g. pay down some expensive debt. If not, then she can simply leave the whole lot where it is until she's ready to retire and then do it all together.
Would the additional bonus via tax relief achieved by using the pension lump sum to fund additional AVCs constitute a sound financial reason? Likely 40% bonus, assuming not exceeding any limits.If she needs / wants the 25% of the old DC scheme now as a lump sum, she could take it. Out of the remaining €75,000 (ish) she could put the first €63,500 into an AMRF and put the remaining €12,000 (ish) into an ARF. Then when the time comes for her to draw her larger DC fund, she can take a lump sum from it and put the balance into the same ARF she already set up. I hope that makes sense.
That said, I'm not a fan of accessing lump sums from pensions early unless there is a sound financial reason for doing so, e.g. pay down some expensive debt. If not, then she can simply leave the whole lot where it is until she's ready to retire and then do it all together.
Would the additional bonus via tax relief achieved by using the pension lump sum to fund additional AVCs constitute a sound financial reason? Likely 40% bonus, assuming not exceeding any limits.
Many thanks, that's pretty much what I was thinking as outlined in my earlier thread;It can do, with careful planning. Depends on individual circumstances. In some ideal circumstances, all AVCs can be withdrawn tax-free at retirement as a top-up to the tax-free lump sum. If so, then the 40% tax relief on AVC contributions is a giveaway. At the far end of the scale, if the AVCs are only going to top up income and retirement income is going to be taxable at 40% plus levies anyway, then there's little point in making AVCs at all. On the way in 40% tax relief. On the way out, 40% tax plus levies.
It's a question that must be looked at in the context of individual circumstances.