How to calculate what my 2 pensions would be if I were to access them at 60.

N

Norbert

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Hi.

I have 2 pensions both in DB schemes.

Pension 1 is deferred as I left that employer. I was employed there for 12 yrs. My deferred pension is 10,000 euro pa at normal retirement age and the current value of my Avcs is 385,000 euro .

Pension 2 - I am currently employed and in the scheme for 10 yrs . My projected pension is 18,660 euro at normal retirement age and the current value of my Avcs is 140k. I am 58 and would consider retiring at 60 if the figures permitted me to do so. I would then have 12 yrs of service.

Based on the above would anyone know how to calculate what my pensions would be if I were to access them at 60. Along with that what would be the tax free lump sum I could get from both sets of Avc I am aware that you can reveive a lump sum of UP to 200k tax free. Would I be able to achieve this? Would I be able to withdraw the remainder @ a 20% tax rate?

I have sought independent advice but all I've got from that is - we can manage your pension for you -

Hope this explains things

Regards
 
In terms of the Retirement lump sum, the maximum you can get is based on salary and service. You don’t state what is your current salary. Also you don’t state what is your normal retirement age for both schemes - is it 65?
You can take a lump sum from each scheme, but in each case its based on service and salary. The fact that you have an AVC attached to each scheme does not increase the potential lump sum. You need to ask the administrators of both schemes as to what the benefits will be:
- Gross pension
- lump sum and reduced pension
The AVC fund can then be used to :
- provide an additional pension (buy an Annuity) or
- invest into an ARF (from which you can draw down an income each year)
- pay the retirement lump sum and thus take the Gross Pension without any deduction.

Whatever the retirement lump sum is (combined from both schemes), up to €200k is tax free. Any amount above €200k is taxed at 20% - up to €500k. But if the combined numbers (based on service and salary) is less than €200k then that is your limit. You don’t get to go above that number just because you have an AVC fund.
So I think you need to start with both scheme administrators to calculate you options under each scheme.
 
Thanks a million for your reply Conan.
My normal retirement age is 65 and my current salary is 83,000. If the combined avc tax free lump sum is below the 200k for example 120k then can I take the remainder up to 500k at a tax rate of 20%. Ie 120k to 500k at 20%..
Cheers
 
Norbert said:
Thanks a million for your reply Conan.
My normal retirement age is 65 and my current salary is 83,000. If the combined avc tax free lump sum is below the 200k for example 120k then can I take the remainder up to 500k at a tax rate of 20%. Ie 120k to 500k at 20%..
Cheers
Click to expand...
No. Your overall Revenue max is the combined figure based on service and salary in each scheme. The fact that you have two AVC pots does not increase the size of the lump sum.
So for example, if you retire with say 12 years service from your current employment, the normal lump sum (ignoring any possible reduction for retiring early) would be 12x3/80ths x Salary. So c €37,000. That would be your limit. You don’t get a higher figure just because you have an AVC fund. Because this figure is less than €200k then it’s all fax free. But you cannot take any further lump sum (taxable or not) in respect of this employment.
Normally to get the maximum Revenue lump sum (up to 150% of Salary) you need at least 20 years service. But even if you had that service by retirement age, it would still only give you a max lump sum of c€125k. Staying on to age 65 and assuming c17 years service, would increase your max lump sum closer to c€100k - based on ”uplifted scale” - (but then you could not take an additional lump sum from the previous scheme.
The calculation of your lump sum from the previous scheme is some what more complicated. But assuming c12 years service in both schemes I cannot see your combined lump sum being more than c€75,000 (depending of salary at time of leaving previous employment).
 
Is the lump sum not limited to 25% of the fund value? I thought to access 200k tax free you'd need to have a fund of 800k.
 
David_Dublin said:
Is the lump sum not limited to 25% of the fund value? I thought to access 200k tax free you'd need to have a fund of 800k.
Click to expand...
But that only applies to a Defined Contribution Scheme. The OP said his benefits are Defined Benefit, so the max of 150% of Salary applies, assuming you have at least 20 years service.
 
My understanding is that, in practice, many DB schemes will not allow former members to retire earlier than the NRA for the scheme. You might want to check that point out with the Trustees OP.

g
 
Most pension scheme managers nowadays have online portals which allow you to request transfer quotes and/or early retirement estimates. It would be worth checking with your schemes to see if such a facility exists. Certainly the likes of Mercers have one.
 
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