Moving old pension to PRB or leave as is until retirement.

[world201812]

I recently left an employer and have been sent a statement of leaving options.

One option is to leave the DC pension where it is, in the company scheme, and I presume draw it down at 68 or whatever the pension retirement age is 30 odd years from now.

It’s basically an Irish Life Administered scheme.

My second option appears to be to transfer it into a Personal Retirement Bond (PRB), and set the latter up myself, and transfer the pension in.

I have recently joined the public sector, and if I was to ever have the chance to retire early, could I draw down my benefits accrued to date from my previous employer at the same time?

Or would I have to wait until my previously planned for age of retirement with former employer, or 68 or so?

On the face of it, PRB means I can manage it closer than leaving it in ex-employer scheme, and not dependent on financial health of ex employer pension scheme.

What is recommended, PRB or leave as is, given my circumstances?

 

[cremeegg]

1. Your DC pension is not dependant on the financial health of your ex employer. Its assets are entirely separate, and funded. (short of serious criminality)

2. If you stay in the ex employer scheme you cannot retire from that pension until the rules of the scheme allow. If you move to a PRB it should be possible to set this up so you can retire at any age after 50.

3. The costs of an employer scheme are likely to be lower than the you would pay in a personal scheme. They should have got a good deal for a company sized scheme, though you should investigate this.

 

[kevhenry]

8 Reasons Why You Shouldn’t Leave a Pension Behind

1. You might just forget you were in that scheme (this happens a lot, particularly when a significant amount of time has elapsed).
2. You might want to start a completely new life abroad meaning the trustees may not be able to track you down if they need to.
3. You could die before retirement age which could make things very difficult for your dependants.
4. Your investment could significantly underperform since you have no control over it or get any advice on it.
5. Your old employer could go out of business which would make finding your pension very difficult.
6. Your old employer could be taken over by another firm.
7. You would only be able to access it from the set retirement age of the main scheme.
8. You might not have the option to transfer it out later on if PRB’s are removed from the market.

Kevin
www.thepensionstore.ie

 

[kevhenry]

Option 1: Leave Your Pension Where It Is

Advantages;

• Charges are likely to be lower in a large group scheme

Disadvantages;

• Any retirement options, including early retirement, are bound by scheme rules and require permission form the trustees.
• 65 is the standard retirement age for corporate schemes so that would be the earliest age you could claim benefits.
• Large schemes have limited investment options since they’re built for groups of employees, not individuals.
• Trustees are not obliged to keep in contact with deferred members.
• If the scheme is closed you could lose your accumulated rights if you are transferred out to a PRSA instead of the current PRB option.

Option 2: Transfer Your Pension into a Personal Retirement Bond (PRB)

Advantages;

• Full cash value is held under one single premium contract that is owned by you personally.
• Your accumulated rights are preserved i.e. all salary and service details are recorded which maintains your rights to the ‘lump sum only’ option.
• You can access your benefits from a PRB from age 50.
• You have full control over your money and the investment decisions.
• You can design a personalised, risk tailored portfolio that suits your tolerances, risk profile and long term growth goals.

Disadvantages;

• The annual management charges tend to be higher depending on the funds and/or assets chosen.

Option 3: Transfer Your Pension Into Your New Employers Pension Scheme

Advantages;

• You maintain full active control over your entire pension fund.

Disadvantages;

• You would lose all the accumulated rights of salary and service built up in that scheme.

So what should you do?
In most cases the best option will be the Personal Retirement Bond (PRB) since it;

• Maintains all of your accumulated benefits related to your salary and service.
• Allows you to manage your investment strategy
• Gives you complete control over your asset.

A Personal Retirement Bond allows you to assume ownership of your investment so you can manage it effectively, monitor how it's doing and make changes if required.

Leaving a pension behind means you'll always be wondering about it whereas a personal retirement bond puts you in complete control.

Kevin
www.thepensionstore.ie