Pension situation moving job

[AJ1]

Hi there,

I'm thinking of moving jobs but wanted to consider the impact on My pension. I have a defined contribution pension with irish life worth 170000 currently paying into it for last 16 years. If I leave, does the pension just sit there until I retire? Will it continue to go upon down in value depending on the fund?

I will be starting a new pension in my new job. From a pension value point of view would it be better to stay in my current job and continue to pay into pension? Or move and end up with 2 smaller pensions?

 

[Conan]

If you take the new job you will have two options regarding the existing pension
- leave it where it is and it will continue to grow (hopefully) based on investment performance, or
- possibly transfer it into new new Employers scheme
As for staying in your current job, that obviously depends on the salary and conditions etc. There is no need to base your decision to move job on the basis of what happens to your existing pension.

 

[Paddy1981]

I have a pension with a previous employer, about 18 years worth. I left 5 years ago, but the pension stayed there. Having contributed nothing to it since then, it currently sits 62k higher than when I left.

It comes down to personal choice, really. You could always transfer it to new employer (if they allow it), or take a buy out bond and reinvest elsewhere.

On a side note, and sorry to invade your post, but if you have a buy out bond, can you take the full amount at 50? As in, take 25% tax free, then remaining amount less taxes? Thanks.

 

[LDFerguson]

On a side note, and sorry to invade your post, but if you have a buy out bond, can you take the full amount at 50? As in, take 25% tax free, then remaining amount less taxes? Thanks.

Yes. The other 75% will be taxed as if it was income in that year, so if you're already earning elsewhere, you could lose half of that 75% to taxation. But you're allowed to do it.

 

[Paddy1981]

Thank you LD, appreciate it.

 

[Itchy]

If you take the new job you will have two options regarding the existing pension
- leave it where it is and it will continue to grow (hopefully) based on investment performance, or
- possibly transfer it into new new Employers scheme

In relation to ceasing employment, is it possible to move the paid-up occupational scheme to another provider? Primarily thinking of obtaining lower fees. Fund is >€100k and >25 years to retirement with Zurich @ 1% AMC.

 

[LDFerguson]

In relation to ceasing employment, is it possible to move the paid-up occupational scheme to another provider? Primarily thinking of obtaining lower fees. Fund is >€100k and >25 years to retirement with Zurich @ 1% AMC.

Yes. What you're looking for is known as either a Buy-Out Bond or a Personal Retirement Bond (same thing; different names.) Any broker worth their salt should be able to arrange one for you with lower than 1% AMC.

Regards,

Liam
www.FergA.com

 

[dubdub123]

Yes. What you're looking for is known as either a Buy-Out Bond or a Personal Retirement Bond (same thing; different names.) Any broker worth their salt should be able to arrange one for you with lower than 1% AMC.

Regards,

Liam
www.FergA.com

I have recently moved employment and pension with previous employer is at around 40k. Im 50 years old and still working. Is it an option for me to take 25% out as lump sum and move remainder into my current active scheme?
Could a broker help with guidance as ive also a PRSA from years ago.
Thank you

 

[LDFerguson]

I have recently moved employment and pension with previous employer is at around 40k. Im 50 years old and still working. Is it an option for me to take 25% out as lump sum and move remainder into my current active scheme?

You can take early retirement from this scheme, take the 25% tax-free lump sum now and move the remaining €30,000 into an Approved Retirement Fund (ARF) of your choosing, which can be invested in funds of your choosing. In the year in which you turn 61 you must start withdrawing an income of at least 4% per year from the ARF which is taxable.

As a general rule I don't encourage people to withdraw their pension funds early as they were always intended to provide for your retirement. But if there's a need for the €10,000 now, then it's an option to be considered.

Could a broker help with guidance as ive also a PRSA from years ago.

As a broker, I'm not exactly impartial in answering this question. But yes a broker should be able to advise you on your options.

 

[fayf]

You can take early retirement from this scheme, take the 25% tax-free lump sum now and move the remaining €30,000 into an Approved Retirement Fund (ARF) of your choosing, which can be invested in funds of your choosing. In the year in which you turn 61 you must start withdrawing an income of at least 4% per year from the ARF which is taxable.

As a general rule I don't encourage people to withdraw their pension funds early as they were always intended to provide for your retirement. But if there's a need for the €10,000 now, then it's an option to be considered.



As a broker, I'm not exactly impartial in answering this question. But yes a broker should be able to advise you on your options.

In the case of a 25% tax free withdrawal, my understanding, is that one also needs to move €63.5k into an AMRF, and this is mandatory, leaving the balance, going into an ARF, is this correct ?

 

[LDFerguson]

In the case of a 25% tax free withdrawal, my understanding, is that one also needs to move €63.5k into an AMRF, and this is mandatory, leaving the balance, going into an ARF, is this correct ?

It was, but it's not any more. Finance Bill 2021 abolished the AMRF with effect from 1/1/2022. After that date, there's no need to set aside €63,500 and all can go into an ARF. A welcome change in my opinion.

 

[fayf]

It was, but it's not any more. Finance Bill 2021 abolished the AMRF with effect from 1/1/2022. After that date, there's no need to set aside €63,500 and all can go into an ARF. A welcome change in my opinion.

Thanks, i clearly missed that update. AMRF was really just an ARF, with specific conditions on accessing, but its definitely simpler & clearer, to have just one pot.

 

[LDFerguson]

Thanks, i clearly missed that update. AMRF was really just an ARF, with specific conditions on accessing, but its definitely simpler & clearer, to have just one pot.

Yes I'm happy with this change. It also means that people with smaller funds, e.g. €85,000 or less, are not put in a situation where the entire fund is locked into an AMRF after withdrawing the tax-free lump sum.

And it makes my job a lot easier explaining options to people at retirement.