Multiple pensions

[mary poppins]

I am 47 and planning retirment at 58. I have 3 occupational pensions from previous jobs (18K, 155K, 35K). I am starting a new job and another new pension and will be contribution the max allowed for my age for the next 11 years. What are the implications of keeping them seperate or joining them into the new fund (apart from paying one annual maintenance fee instead three). How does the lump sum amount that can be taken get applied across multiple pensions? How do you know if the lump sum is based on final salary or % of fund?

 

[Steven Barrett]

First of all, there is nothing wrong with having multiple pensions.

If you transfer the benefits to your new scheme, it becomes part of the scheme. The accumulated years service also travels with you so the 2 year vesting rule will be satisfied.

If you die pre retirement, retained pensions ie the 3 separate ones are paid out as a lump sum. If transferred into new plan, you get a maximum lump sum of 4 times salary plus the value of your personal contributions. Anything over that has to be used to purchase an annuity.

You can access the 3 old ones from age 50 or draw them down at different times if you wish. If you transfer them in, you have to leave the pension scheme to access them early and as they are part of the scheme, they will be drawn down as one.

The lump sum is paid out on each individual contract as they mature. You don't take the lump sum for all of them from just one policy, too messy to administer. You are eligible to a lump sum from each of them. They will ask for your P45 from each employment if you mature them before retirement age, so keep them safe.

I would keep them separate, it gives you more options.

Steven
www.bluewaterfp.ie

 

[mary poppins]

First of all, there is nothing wrong with having multiple pensions.

If you transfer the benefits to your new scheme, it becomes part of the scheme. The accumulated years service also travels with you so the 2 year vesting rule will be satisfied.

If you die pre retirement, retained pensions ie the 3 separate ones are paid out as a lump sum. If transferred into new plan, you get a maximum lump sum of 4 times salary plus the value of your personal contributions. Anything over that has to be used to purchase an annuity.

You can access the 3 old ones from age 50 or draw them down at different times if you wish. If you transfer them in, you have to leave the pension scheme to access them early and as they are part of the scheme, they will be drawn down as one.

The lump sum is paid out on each individual contract as they mature. You don't take the lump sum for all of them from just one policy, too messy to administer. You are eligible to a lump sum from each of them. They will ask for your P45 from each employment if you mature them before retirement age, so keep them safe.

I would keep them separate, it gives you more options.

Steven
www.bluewaterfp.ie

Thanks for the detail Steven. If I have enough to live on from savings between 58 and 65, and no debts to pay off, does it make sense to leave all of them in place till 65 or are there considerstions to take into account (like a future levy against pensions)?

 

[Steven Barrett]

Thanks for the detail Steven. If I have enough to live on from savings between 58 and 65, and no debts to pay off, does it make sense to leave all of them in place till 65 or are there considerstions to take into account (like a future levy against pensions)?

If a future pension levy comes in, it won't be overnight and you can mature the pensions and transfer them to an ARF. The last time the levy was introduced, it didn't apply to ARF holders.

Keeping them separate gives you flexibility of maturing one if you need it and then the others at a later date. They must be matured by age 75.


Steven
www.bluewaterfp.ie

 

[Smoneen]

If you die pre retirement, retained pensions ie the 3 separate ones are paid out as a lump sum. If transferred into new plan, you get a maximum lump sum of 4 times salary plus the value of your personal contributions.

As the retained benefits are occupational pension scheme they are taken into account as retained lo sums for the purposes of calculating the death in service benefit. Given the size of one of them it is unlikely that the OP would qualify for a 4 times death in service benefit under their new scheme. If the take 2 times death in service the retained lump sums can be ignored.

 

[fayf]

Thanks for the detail Steven. If I have enough to live on from savings between 58 and 65, and no debts to pay off, does it make sense to leave all of them in place till 65 or are there considerstions to take into account (like a future levy against pensions)?

One may need to consider PRSI. If you are not paying a stamp (an insurable week)for these 8 years, it “may“ impact your entitlement to the full state contributory pension.

However, if one draws enough from these pots, that will satisfy the PRSI requirement, eg even a modest draw down, of €12,500 per annum (paid over 12 months)will mean PRSI paid of €500 annually (Class S)and 52 weeks Insurable weeks. It also makes sense from a tax point of view, as its unlikely any PAYE or USC will be due.

 

[ginslia]

You can access the 3 old ones from age 50 or draw them down at different times if you wish. If you transfer them in, you have to leave the pension scheme to access them early and as they are part of the scheme, they will be drawn down as one.

The lump sum is paid out on each individual contract as they mature. You don't take the lump sum for all of them from just one policy, too messy to administer. You are eligible to a lump sum from each of them. They will ask for your P45 from each employment if you mature them before retirement age, so keep them safe.

I'm in a similar situation to the OP with multiple previous pensions built up in addition to current occupational scheme (PRSA, DB, AVC etc). How easy is it to access any previous schemes at age 50 (or pre 65)? Are there any special conditions to satisfy?

 

[mary poppins]

As the retained benefits are occupational pension scheme they are taken into account as retained lo sums for the purposes of calculating the death in service benefit. Given the size of one of them it is unlikely that the OP would qualify for a 4 times death in service benefit under their new scheme. If the take 2 times death in service the retained lump sums can be ignored.

I dont understand this, could you explain what the last sentence means? thanks

 

[Steven Barrett]

I'm in a similar situation to the OP with multiple previous pensions built up in addition to current occupational scheme (PRSA, DB, AVC etc). How easy is it to access any previous schemes at age 50 (or pre 65)? Are there any special conditions to satisfy?

Any occupational pension can be accessed from age 50 onwards. That includes employer PRSAs.
Any personal pension plans can be accessed from age 60 onwards. That includes personal PRSA's.

You can access pensions at any age if you have to retire early due to ill health.

Steven
www.bluewaterfp.ie