Cashing in 25% of my PRB.......options ??

Xaviermcd

New Member
Messages
6
Folks,

First time poster so hopefully I can get some advice or at least some understanding regarding my query.

I invested a sum of money back in 2005 in a Personal Retirement Bond which has grown quite well over the years.

I turned 50 recently and am looking at releasing the 25 % of the fund as a Tax Free Lump sum. This is for personal reasons, The remainder of the funds 75% is where I'm a little puzzled. It would appear my options are as follows.

  1. In addition to the lump sum I can secure a pension
or

  1. Invest the balance in either an ARF or AMRF

I know that I would like the 75% to invested so that it continues to grow until I actually retire which won't be until 65

I know I should be talking to a financial advisor but no harm in asking here.


Please note i have another pension with my current job which would be my main focus on growing with as much in contributions as I can afford.

Any advice greatly appreciated.
 

SBarrett

Frequent Poster
Messages
3,010
If you want to keep it invested, an AMRF is your option. As it is unlikely you have a guaranteed pension income of €12,700 or over, the first €63,500 must go in an AMRF. Anything over that goes in an ARF.


Steven
www.bluewaterfp.ie
 

Gordon Gekko

Frequent Poster
Messages
3,531
It’s also a really important point. When switching employment, someone is nearly always better moving to a Buy-Out-Bond / PRB or staying as a deferred member of the old scheme. It gives the flexibility to access the benefits at age 50 to pay down debt for example. But if you move your benefits into the new scheme, you can’t access them without leaving your job. The benefits would also be paid out in full tax-free to a spouse in the event of an untimely death (i.e. no “4 times salary” rule etc).
 

Xaviermcd

New Member
Messages
6
The bond at present is worth €71k or so with the 25% Lump sum worth around €17.7k.

I don't want to transfer into my current pension as I want to access a lump sum for personal reasons.
If I take the lump sum it leaves a remainder of €53.6k which I would like to re-invest so it can continue to grow and this is where I get a little confused.

I don't want to commence with a pension payment (not even sure if I can as I'm not retired and won't be for another 15 years)

My options listed then mention that I could take out an ARF if I have a guaranteed pension income of €12,700 or over.
If I don't the first €63,500 must go in an AMRF. It does mention that it mightn't cost the full €63500 to purchase the guaranteed income for life in retirement of €12700 pa.

Am I correct in understanding that the amount it costs to purchase the guaranteed income for life in retirement of €12700 pa would come out of the €71k so reducing the lump sum amount.

Does my other pension in current job to which I'm currently contributing a decent amount into (22%) with the fund currently worth €131.7k have any bearing on this situation ???

Finally does the state pension come into play if at all in affecting my position ???

Apologies for what might seem silly questions but I really appreciate all info/advice.

Thanks for all the help
 

Xaviermcd

New Member
Messages
6
I don't plan on transferring the plan to current job. Are the benefits payout affected if I kick the bucket given that in my job the company does indeed pay out 4 times salary.
 

Xaviermcd

New Member
Messages
6
The bond at present is worth €71k or so with the 25% Lump sum worth around €17.7k.

I don't want to transfer into my current pension as I want to access a lump sum for personal reasons.
If I take the lump sum it leaves a remainder of €53.6k which I would like to re-invest so it can continue to grow and this is where I get a little confused.

I don't want to commence with a pension payment (not even sure if I can as I'm not retired and won't be for another 15 years)

My options listed then mention that I could take out an ARF if I have a guaranteed pension income of €12,700 or over.
If I don't the first €63,500 must go in an AMRF. It does mention that it mightn't cost the full €63500 to purchase the guaranteed income for life in retirement of €12700 pa.

Am I correct in understanding that the amount it costs to purchase the guaranteed income for life in retirement of €12700 pa would come out of the €71k so reducing the lump sum amount.

Does my other pension in current job to which I'm currently contributing a decent amount into (22%) with the fund currently worth €131.7k have any bearing on this situation ???

Finally does the state pension come into play if at all in affecting my position ???

Apologies for what might seem silly questions but I really appreciate all info/advice.

Thanks for all the help
Anybody out there with some advice or info please let me know.
 

Gordon Gekko

Frequent Poster
Messages
3,531
The State Pension only counts towards the guaranteed specified income threshold when you’re actually receiving it.

To purchase €12,700 of income might cost circa €400,000 so that’s not a runner.

You’ll get 25% out in cash; the balance will move into your AMRF and it can stay invested. You can withdraw 4% of its value each year if you want to. Other than that, it can’t be touched until you reach 75 or have €12,700 of guaranteed specified income.

When you access your other scheme, you’ll get your 25%, the balance will then top up your AMRF to €63,500 and fund an ARF. Mandatory 4% a year from the ARF if age 61 or more but free to withdraw as much as you want unlike the AMRF.
 

Xaviermcd

New Member
Messages
6
The State Pension only counts towards the guaranteed specified income threshold when you’re actually receiving it.

To purchase €12,700 of income might cost circa €400,000 so that’s not a runner.

You’ll get 25% out in cash; the balance will move into your AMRF and it can stay invested. You can withdraw 4% of its value each year if you want to. Other than that, it can’t be touched until you reach 75 or have €12,700 of guaranteed specified income.

When you access your other scheme, you’ll get your 25%, the balance will then top up your AMRF to €63,500 and fund an ARF. Mandatory 4% a year from the ARF if age 61 or more but free to withdraw as much as you want unlike the AMRF.
Hi Gordon,
Many Thanks for responding.....

In nutshell to see if I've got this right

Bond is worth 71k
I would like to access a lump sum of 25% but this won't be possible as I would have to invest a minimum of 63.5k in a AMRF which would leave around 7.5k cash lump or if I understood you right I could just invest the 53.5k now in the AMRF and then top it up at a later stage to the required 63.5k

Am I right in understanding that the funds in the AMRF will continue to grow like it has been doing in the PRB ?

The other option quoted was to take the full 25% circa 17.7k and use the remainder 53.5k to secure a yearly income for life that the provider states would commence this month. The figures mentioned for this are as follows

Standard Pension with no yearly increases is €1,323.80
Standard Pension with 3% yearly increase is €648
Inflation Protected Pension is €591.70

These I expect are obviously annual payments given that only 53.5k is funding the pension ??? This 53.5k isn't an investment so wouldn't be growing

I wish the paperwork explained things more clearly. I really appreciate the time you are taking to respond.
 

Gordon Gekko

Frequent Poster
Messages
3,531
The remaining funds continue to grow (or fall).

The annuity option (income for life) doesn’t sound great to me.

What about the 1.5 times salary option? Might that get you all of it out tax-free?
 

Xaviermcd

New Member
Messages
6
I spoke to the provider and I got some clarification pretty much in line with your advice and thankfully my thinking

The best option and most likely for me is to take my 25% as a lump sum and then re-invest the remaining 75% into a AMRF which will hopefully continue to grow until I have to re-visit upon my retirement. I would imagine that I can choose how aggressive / passive the investment strategy will be with the obvious plan to reduce the risk in the latter years.

Would I be correct in saying that when I get retire the AMRF may well have increased in value to exceed the value of €63500 and therefore could covert over to an ARF which would allow greater access to my funds.

Am I right in saying that both the AMRF and the ARF are investment policy's with the main difference being access is more restricted with the AMRF (4% withdrawal once per year)

There was no option on my paperwork for 1.5 times salary and I guessing that's because I'm only 50 and not retiring for another 15 years.
 
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