Cash flow problem in advance of pension

Discussion in 'Pensions' started by handtight, Feb 13, 2017.

  1. handtight

    handtight Frequent Poster

    Posts:
    18
    I have a Pension fund of roughly €1m and I'm due to retire in mid 2018. I was made redundant a few years back and essentially have been living on savings plus a redundancy payment. I still have family and mortgage commitments. Problem is I'm going to run out of cash in coming months and I'm wondering about my options.

    Even though my retirement date is mid 2018 could I apply for this to be brought forward by maybe 6 months?Alternatively could I use a statement of benefits, including lump sum as security for a bank loan?

    Any advise greatly appreciated as this is now becoming a serious worry and I don't have much in the way of financial advise.

    Not sure if it's relevant but my Pension fund is managed by Irish Life.
     
  2. thedaddyman

    thedaddyman Frequent Poster

    Posts:
    684
    I presume by your post that you have had confirmation that you have no entitlement to social welfare of any kind. Do you have any realistic employment options, even part time.
     
  3. North Star

    North Star Frequent Poster

    Posts:
    187
    Hi handtight,

    If you were made redundant and the pension of €1mio you refer to is from an Occupational Pension scheme relating to the same employment you were made redundant from, you may well be able to access the retirement benefits from age 50. This would involve receiving any tax free cash ( unless you waived your right to that as part of your redundancy) and you can then start drawing retirement income from an ARF/Annuity. You can also have the option of deferring taking the ARf income till age 60 - if that suited your needs.

    Pension regulations unfortunately are unnecessarily complicated, but for a fund of that size, not paying for expert advice is I believe a false economy. A good adviser will be able to either simplify the complexity or perhaps even use that complexity to your advantage. If as you say this is becoming a serious worry, I wouldn't delay in getting proper advice. I would also suggest that you pay for the advice on a fee basis, where you have full clarity on the costs upfront and no conflict of agenda.

    All the best Vincent
     
  4. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,859
    Hi Handtight

    Could you tell us your age and whether the pension fund is an occupational pension scheme/buy out bond or a personal pension/PRSA?
     
  5. SBarrett

    SBarrett Frequent Poster

    Posts:
    2,162
    If it's a €1m pension, it's likely that you are in an occupational pension so you can access it from age 50. Some of the really old plans have penalties for accessing the funds before retirement but they will be relatively small at this stage and probably worth taking the hit if you're running out of cash.

    It takes about a month to get everything set up and in place. You can get a good chunk in tax free cash which will make life easy for you.


    Steven
    www.bluewaterfp.ie
     
  6. handtight

    handtight Frequent Poster

    Posts:
    18
    Hi

    Thanks all for the advise much appreciated.

    In response to sorrento, I'm age 63 and I am a member of a DC pension scheme.

    Regarding Social Welfare, this is something I'd prefer not to pursue right now, though for a period after redundancy I was paid JS benefit which ran out.

    Any kind of FT work is difficult right now due to family commitments.

    In reply to SBARRET, I did opt for a cash pay out however, on the qualification age, I have just realised I don't have the scheme handbook. My recollection is however that I can draw a Pension from age 50. I just wasn't sure about the costs involved in doing this. It's something of a relief to hear this can be set up in around a month.

    I think I should to take North Stars advise re professional advise on a fee basis.

    Thanks again to all to you guys for taking the time to post some solid advise.....
     
  7. Sarenco

    Sarenco Frequent Poster

    Posts:
    3,859
    In that case you should be able to access the fund whenever you want - I would suggest you just ring the scheme administrators to discuss your options.
     
  8. North Star

    North Star Frequent Poster

    Posts:
    187
    That's good news handtight. The only pity is that had you came to AAM earlier, you could have got this positive information before it became a worry for you.

    All the best Vincent
     
  9. SBarrett

    SBarrett Frequent Poster

    Posts:
    2,162
    At 63 in a DC scheme, there shouldn't be an issue in maturing your pension now. You may have taken the tax free cash as part of your redundancy package but at least you know there will be a regular cash flow now.

    Best of luck


    Steven
    www.bluewaterfp.ie
     
  10. handtight

    handtight Frequent Poster

    Posts:
    18
    By way of update, it's taken me up to now to get update information on my pension status from the pension administrator. These people don't share my sense of urgency when I submit routine queries!

    The position is that my pension is scheduled to pay out in mid 2018 and there's provision for a substantial lump sum. So far so good.

    Except my former employer is still making contributions as part of a deal to wind down a previous DB scheme. The scheme administrator says that while I'm entitled to access the pension now, the top up payments would cease. This would result in a very substantial loss in terms of my final pension pot. So looks like I'm snookered?

    Would be very grateful for any views around this. Would the experts here accept the position as set out regarding access?
     
  11. North Star

    North Star Frequent Poster

    Posts:
    187
    Do you know how much your former employer will contribute between now and mid 2018? If not request that info from the administrator so you can quantify what you might have to give up. Others might have a view on alternative advice/options.
    Thanks Vincent
     
  12. handtight

    handtight Frequent Poster

    Posts:
    18
    Thanks for getting back Vincent. Be talking over 200k. Which I'd be mad to walk away from.
     
  13. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    31,890
    How much do you need between now and mid 2018?

    What are your mortgage commitments?

    How much is the mortgage and how much is your home worth?

    Would stopping paying your mortgage relieve the pressure?

    You could ask the lender to give you a top up on the basis that you will clear it all out of the cash lump sum in mid 2018. Unfortunately lenders are not very open to such deals now, but do try them.

    Brendan
     
  14. North Star

    North Star Frequent Poster

    Posts:
    187
    Yes for €200k you would be mad to walk away from that...
    However, I am surprised by the size of the amount that is being paid in over the last 15 months before your NRA, other DB wind ups I have dealt with transferred the full 'transfer value' on the DB wind up so the members get use of the funds i.e. they are invested straight away in the DC scheme.
    Agree with Brendan's suggestion but also I wouldnt just let this go without querying this again with the administrators. I am intrigued however and if you wish am prepared to deal with the pension administrators for you on a no foal no fee basis, for a fixed price just to cover my time. Send a pm if interested. No worries if you prefer to get to the bottom of this yourself. All the best Vincent
     
  15. Gerry Canning

    Gerry Canning Frequent Poster

    Posts:
    2,514
    handtight ,

    Not using Social Welfare ?

    I don,t know your reasons but you obviously contributed for years , so you look as though you are entitled to call upon your contributions .
    Can I suggest get an appointment in your local Social Welfare office .
    No more than the AAM advice you might be well pleased ! and good luck.
     
  16. Monbretia

    Monbretia Frequent Poster

    Posts:
    1,079
    But I think he got his contributions from Social Welfare as OP confirmed he got Jobseekers Benefit after redundancy, only option would be means tested Jobseekers Allowance. We don't know if there is another income involved, if still dependant children might be worth looking at Family Income Supplement in case there was any chance of that.