Pension Policy Transfer Options

W

WGT

Registered User
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Hi,
My limited company is being wound up and my pension provider has sent me a letter detailing the transfer options. They didn't indicate which option would be best so hence the question.
The options are

a. Transfer policy ownership to me (the life insured).
b. Transfer value can be calculated and allocated to a Buy Out Bond in my name.
c. The pension benefits can be transferred into a PRSA.
d. The policy can be made paid up and remain with pension provider, with the employer remaining as trustee (don't think this is possible as company is being wound up).

As my new employer don't offer pension benefits until after a year. My guess is that I am better transferring to a PRSA so I can bring it with me to future jobs.
What are the pro's and cons of these options?
My contributions to date are: 83k
Transfer value is: 54k approx.

Thanks
 
Whether you transfer it to a PRSA or a Buy Out Bond, you can still later transfer it into a future employer's Occupational Pension Scheme, if that's what you wanted to do. But there would need to be a valid reason for you to do so. If you are not a director of the future employer and you transfer your pension fund in, you lose the extra options at retirement you currently enjoy (i.e. Approved Retirement Funds).

Of Buy Out Bond and PRSA, the Buy Out Bond can be set up with lower charges. It's possible to set up a Buy Out Bond with no entry charges and annual management charges from 0.65%. PRSA annual management charges are generally 1%.
 
Liam I thought if you transferred to a Buy Out Bond the monies couldnt be transferred out (perhaps this has changed as it used to be the case) and the fund sat in the buy out bond till retirement.

I'd be interested to know for sure.

Thanks

Stephen
 
Hi Stephen,

As far as I know, there's no legislative reason why you cannot transfer out of a Buy Out Bond into an Occupational Pension Scheme. Specific Buy Out Bond contracts may have early exit penalties etc., but apart from that it's fine.

I double-checked this with Irish Life in case my knowledge was rusty and they concur.

Cheers, Liam
 
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