Cashing in a pension plan

S

skenn_ie

Registered User
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I want to cash in my pesnion plan, but have been told that I can't unless I "take retirement benefit". What does this mean, and why ?. Whose regulations, and where can I find details. I never did get around to claiming tax relief on the contributions. I seem to be able to transfer the pension to another company, just not to cash.
 
Moved from Other Financial Issues.

You cannot cash in a pension plan except when you have less than two years membership of an occupational scheme, you leave the job and you take a refund of personal contributions only (not employer contributions) net of tax.

Taking retirement benefit means drawing down your pension benefits (e.g. up to 25% lump sum tax free, buying an annuity to provide retirement income, rolling the pension over into an Approved [Minimum] Retirement Fund leaving it invested until later in retirement etc.). Normally you cannot get you hands on pension savings except in this sort of situation. I am surprised that you seem not to have been aware of the restrictions on access to pension savings when you started a pension.

You can find more information on www.citizensinformation.ie and www.pensionsboard.ie. You should claim tax and PRSI relief on any pension contributions to date if youe have not already done so. You are only supposed to be able to backdate claims by 4 tax years so you might want to do this sooner rather than later.
 
Is this a rule definde by the state, or the pension companies ?. I seem to be able to change provider, and move the "savings" across. I would have thought that that rule would be to deter/prevent tax avoidance ?.
 
The state. You can transfer pensions in many circumstances but other than drawing down pension benefits at retirement you cannot otherwise access the cash except in limited circumstances (e.g. less than two years in an occupational scheme or else in certain cases of inability to work again due to illness/disability).
 
The State offers generous tax reliefs for pension contributions but the trade-off is that the money saved is being accumulated to help fund your retirement years, hence the requirement to leave it invested until retirement.
 
And, just to clarify, the fact that you may not have claimed this relief to date (and it remains outstanding) doesn't alter things - i.e. allow you to take a refund of contributions.
 
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