Of the remaining options it seems there is no advantage to a PRSA or PRB over leaving the fund with my previous employer.
If the value of your fund is now less than the combined contributions of both yourself and your employer is it possible to take the value of your fund without any clawback of tax? Based on the fact that you are aged over 50 and you have been made redundant?
Is it possible to leave the fund with the previous emplyer with an option to transfer to a new employer in the future.
If so, it is definitely the logical choice as you can deciee on a better home for it when your short term and long term career plans become clearer.
If you are over 50 and have benefits in an Occupational Pension Scheme, you can take early retirement with the agreement of the scheme trustees. You will generally get a tax-free lump sum and the balance (if any) in the form of an annuity (guaranteed pension for life) and/or possibly an Approved Retirement Fund (ARF). Income from an annuity or an ARF will be assessable for Income Tax. The value of the fund won't change that.
Liam D. Ferguson
I wouldn't agree. A PRSA offers you a wider range of options at retirement.
A PRSA or a PRB allows you to choose your own provider and fund(s) and change such choices at will. If you leave the fund in the scheme you're stuck with the provider the scheme trustees choose.
A PRSA or PRB allows you to sever your ties with the scheme. If you leave your fund in the scheme you'll need to maintain ongoing contact with the scheme trustees until retirement, as the trustees need to co-sign any transactions concerning the fund up to and including when you want to draw your benefits at retirement.
Can the tax free lump sum be equivalent to the value of the fund ever?
1) My letter says as the value of my fund is less than €10,000 I can transfer to a PRSA. However, this is incorrect as the value of the fund is greater than €10,000. Does a PRSA become less attractive given that the fund is over €10,000?
2) My 'normal retirment age' is 60. However, the PRB refers to surrendering the PRB at any age after 50. Is this an advantage of a PRB in that I will get access 10 years earlier than with a PRSA? The option of leaving the pension in my employers fund also states that I can draw on it after age 50.
3) Does after age 50 mean 50 years and 1 day or 51 years?
That wont work, you must be in the original company for the entire vesting period to get the original employers contribution. You cannot combine vesting periods over two employers or pension schemes
Yes - the calculation of maximum tax-free lump sum for an employee in an Occupational Pension Scheme involves years of service and salary at retirement, so it can happen that this calculation allows for a lump sum that is the size of (or greater than) the fund available. If so, you can take the whole fund out as a tax-free lump sum.
What won't work?
I wrote a piece recently on the various options. You can read it [broken link removed].
If you choose to take a refund of your own contributions, your employer gets a refund of theirs. You cannot take a refund and keep the employer contributions. For this reason, option (5) is the least attractive from a long-term perspective, although it's the only one that puts money in your hand now, if that's important.
Liam D. Ferguson
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