Old Pension-Options

[true_blue]

Hi Folks,
I have a question just regarding an old pension i had,i had a pension with my old job in 2000 to 2002. Both me and the employer contributed to it, now i have been lazy and havent got round to tieing up my loose ends till now!!

So i looked into the policy that i have and its pretty bad and has performed bad for me, management fees of 2% a year and 5% contribution fees and return of 3.3% a year. So at 2% management fees i want to move it, better deals around now!! There is no penalty for me moving it.

So here is my problem, im not in the country and probably will not return for the forseeable future. So question is where is it best to move it to?? Cashing it is not an option, if i cash it i must give half back to employer and then pay tax at 20% on the rest.So out of 10g that leaves me with 4g! so loss of 6 straight away on that option.

So what alternatives would people recommend for it, i wont be contributing to it for now or any time in the forseeable future so it will be just sitting there.

any thoughts are welcome.

Thanks alot,
true_blue

 

[ClubMan]

The options in this situation would normally be

• Leave it invested where it is
• Transfer to another occupational scheme
• Transfer to a PRSA (depending on the full value of the fund - e.g. may be an option if < c. €10K)
• Transfer to a buy out bond which is a "standalone" pension bond
• Take a refund of personal contributions after deduction of tax if you had less than 2 years membership of the scheme but the time for this option has probably passed at this stage.

 

[Guest126]

The options in this situation would normally be

• Take a refund of personal contributions after deduction of tax if you had less than 2 years membership of the scheme but the time for this option has probably passed at this stage.

Hi Club the OP (I think) does not want to take a refund...but the time that counts here is from Date Joining Scheme to Date of Leaving and so the refund can still be taken twenty years after leaving the scheme (so long as period of active membership of scheme less than two years)...the wording above suggests that the refund must be taken within a specific timeframe of leaving the fund.

 

[ClubMan]

Thanks for that clarification. I wasn't sure if it was just the membership/vesting time or the real/calendar time that mattered.

I just thought that outlining the possible options might help. Then the original poster could consider which might suit them best and then look for specific pension products in that category. I think that recommending a specific pension product without further information and consideration would be premature. So - over to the original poster ... what do you think...?

 

[true_blue]

Thanks for the responses guys. Ok first thoughts on options are

• Leave it invested where it is

Dont want to do this because of the 2% management fees, thats high compared to nowadays, especially when im only getting a 3.3% return on it.

• Transfer to another occupational scheme

Need to do some homework on this option i.e what benefits i have and what products etc are there.

• Transfer to a PRSA (depending on the full value of the fund - e.g. may be an option if < c. €10K)

Was looking at this option alright but i think i read somewhere on the pension board that one must make a minimum annual contribution(which doesnt bother me but i might forget since im not at home ) but hoping this depends on the product you go for. Have to do homework on different products and what they invest in.

• Transfer to a buy out bond which is a "standalone" pension bond

No idea about this option, more homework!!

• Take a refund of personal contributions after deduction of tax if you had less than 2 years membership of the scheme but the time for this option has probably passed at this stage.

If i take a refund then i loose my employers contribution, which is half. Then i get taxed at 20% so this is not really an option for me.


Im definetly going to move it but its the where to?? Thanks for the list of options guys, will look into them when i get the time and will keep you posted on what i do with it in the end!!

 

[ClubMan]

Dont want to do this because of the 2% management fees, thats high compared to nowadays, especially when im only getting a 3.3% return on it.

Fair enough - 2% p.a. is relatively high alright.

Need to do some homework on this option i.e what benefits i have and what products etc are there.

This is only an option if you are currently a member of an occupational scheme.

Was looking at this option alright but i think i read somewhere on the pension board that one must make a minimum annual contribution

No - that's not the case. Note that if your pension fund value is over c. €10K then the transfer to a PRSA will not really be an option in practice due to the regulatory requirements (actuarial report explaining how this choice is in your best interests) and the costs involved.

No idea about this option, more homework!!

Covered in many other threads about pension transfer options.

If i take a refund then i loose my employers contribution, which is half. Then i get taxed at 20% so this is not really an option for me.

Fair enough - I just mentioned it as one possible option.

At least you're narrowing things down to possible options for your situation. As I say, there are many other threads dealing with this sort of situation that might be worth reading.

 

[true_blue]

Thanks Clubman, will try and get some hours together and get this done and dusted.

Just a thought that im having regarding PRSA´s, most people say to put your money 100% in equities, in my case, its more a lump sum because i wont be contributing any more to it, now my problem with going for just equity based is that "equities" are in a bit of a bubble at the moment. I know you can put it into other areas but whats your thoughts on an equity based PRSA?? if i was contributing regularly then it wouldnt bother me so much but since its just a lump sum.

Ill keep an eye on this also...would be of interest to me if i could do it
http://www.askaboutmoney.com//showthread.php?t=40155

 

[ClubMan]

Just a thought that im having regarding PRSA´s, most people say to put your money 100% in equities

Unless you are near retirement then a high risk/reward profile fund would often be one suitable option.

in my case, its more a lump sum because i wont be contributing any more to it, now my problem with going for just equity based is that "equities" are in a bit of a bubble at the moment.

That's a subjective point of view. Others would argue that at any point in time the markets reflect the fair value of equities. If you are investing for the long term then transient market performance should not really concern you unduly.

I know you can put it into other areas but whats your thoughts on an equity based PRSA?? if i was contributing regularly then it wouldnt bother me so much but since its just a lump sum.

Personally I think that you are worrying unnecessarily and attempting to time the market which is a bad idea. But it's your money and not mine!