PRB and what to do with it.

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Paul O Mahoney

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I've just received a letter informing me that an old pension I have, and forgot about will be wound up on the 31st of May 2021.
Last time I looked at its value a few months ago it was 30k.
The PRB will be with Irish Life with a AMC of .5% (50bps).
I have no paye taxable income , no social welfare , other than rental income which is in joint names and taxed accordingly via Form 11.
I'm 54 and probably won't work for money again as I'm a cancer survivor and some of my faculties don't function properly. My wife maximises her pension and there is a small 2% "spouses pension " included in her monthly contributions which doesn't attract tax relief....might be wrong.

I might survive another 5 yrs, 10 , 20 who knows it's been 7 since I went into full remission but I still have tumors that might regrow.

Question is what will I do with this few bob?

I presume I can simply leave it there but paying anything by way of charges on my money is alien to me.

I left the company in 2002 after 3 yrs at Snr Management level and from memory my final salary before bonus was about €45k which was the basis of contributions.

Sorry if this is a bit all over the place but any advice would be appreciated.

Paul
 
Sorry for not answering the substantive question, but regarding charges, a 0.5% AMC is good value.
 
Hi Paul,

Is this the only pension that you have?

It'd be useful to get an idea of your overall finances. For example, are you using up your full lower rate tax band already? I'm assuming not if the rent is in joint names.

You could potentially 'retire' the pension, take 25% of it tax free now, and drawdown an income from it, particularly if you can do it effectively tax free.
 
RedOnion said:
Hi Paul,

Is this the only pension that you have?

It'd be useful to get an idea of your overall finances. For example, are you using up your full lower rate tax band already? I'm assuming not if the rent is in joint names.

You could potentially 'retire' the pension, take 25% of it tax free now, and drawdown an income from it, particularly if you can do it effectively tax free.
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It's the only one, the rental properties are joint names and rent in her name as I didn't know if I'd be around, its saved everymonth less maintenance etc and tax by DD in November.
Our (her income) is substantial and her pension funds will be substantial for our needs when she plans to retire at 62 and then consult on her terms.
I sign on annually to protect my contributions from 1987 , and get a headstone grant.

That's it really, I'm treasurer of a new charity we set up last year and it's tiny funding wise and all directors won't be taking any salary , I know I won't.

Might take the 25% and whatever I'd get monthly might join a golf club and let her join the gym/ Spa in Carton.

It has to go to Irish Life first anyway and it'll be August before I can move it to another fund ? That's what the l read and don't really understand it.
 
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Paul O Mahoney said:
It's the only one, the rental properties are joint names and rent in her name as I didn't know if I'd be around
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It might be worth getting a bit of tax advice on the most efficient way to structure this. You have your own tax band to use up, even when you retire, so there's no point paying higher rate tax on rental income in her name if it could be at lower rate in yours.

I hope I'm making sense?

Re the pension, without being too morbid, another option is to leave it untouched, and it'd act as a small life assurance lump sum for your wife if anything was to happen to you.

It all depends on your overall circumstances and what you want to enjoy. It's not always about maximising your financial wealth.
 
RedOnion said:
It might be worth getting a bit of tax advice on the most efficient way to structure this. You have your own tax band to use up, even when you retire, so there's no point paying higher rate tax on rental income in her name if it could be at lower rate in yours.

I hope I'm making sense?

Re the pension, without being too morbid, another option is to leave it untouched, and it'd act as a small life assurance lump sum for your wife if anything was to happen to you.

It all depends on your overall circumstances and what you want to enjoy. It's not always about maximising your financial wealth.
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Thanks really appreciate it we probably need to get proper advise on a slew of stuff anyway and do wills.
 
Paul O Mahoney said:
I have no paye taxable income , no social welfare , other than rental income which is in joint names and taxed accordingly via Form 11.
I'm 54 and probably won't work for money again as I'm a cancer survivor and some of my faculties don't function properly.
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Hi Paul,

I followed RedOnion's link to this thread from the tax query you posted today. I note from the other post above that you have kept up your PRSI contributions by signing on for credits. Have you looked into applying for Invalidity Pension? It's not means-tested, and you can qualify on the basis of your current credited contributions plus your historical paid contributions. It is taxable, although in your circumstances, probably not at the high rate. Might be worth checking out on the basis of your medical situation.
 
Baby boomer said:
Hi Paul,

I followed RedOnion's link to this thread from the tax query you posted today. I note from the other thread that you have kept up your PRSI contributions by signing on for credits. Have you looked into applying for Invalidity Pension? It's not means-tested, and you can qualify on the basis of your current credited contributions plus your historical paid contributions. It is taxable, although in your circumstances, probably not at the high rate. Might be worth checking out on the basis of your medical situation.
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Funny you should mention that as I was filing stuff and in 2012 I had to go into Pearce St, to justify my sickness benefit and they were satisfied I was still being treated for my cancer and said that they would be recommending that I be put foward for a some kind of pension. I did nothing about it as I was still on illness benefit and assumed it would naturally follow.
When I heard nothing I asked at the local SW office and they said I was probably not going to get it as it was means tested? And I did nothing about this after hearing that.

I had to fight for illness benefit to despite being in work since 1987, and on interim stuff from 2002 when we moved up from Cork.

But thanks for your advice I'll follow it up.
 
I should add I'm not great at asking for something and especially financial stuff, but see my wifes tax bill every year, our health insurance, university costs for our children which is paid out from savings I'm beginning to change my view.

Just finished a review our all our financial assets for wills and our children will probably still get taxed when we are gone on what we have amassed thus far.
 
Paul O Mahoney said:
Funny you should mention that as I was filing stuff and in 2012 I had to go into Pearce St, to justify my sickness benefit and they were satisfied I was still being treated for my cancer and said that they would be recommending that I be put foward for a some kind of pension. I did nothing about it as I was still on illness benefit and assumed it would naturally follow.
When I heard nothing I asked at the local SW office and they said I was probably not going to get it as it was means tested? And I did nothing about this after hearing that.

I had to fight for illness benefit to despite being in work since 1987, and on interim stuff from 2002 when we moved up from Cork.

But thanks for your advice I'll follow it up.
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You certainly should. As you say, you have paid your fair share into the system (overpaid, even, as per the other thread) and you are more than entitled to get whatever is available to you.

From what you say about 2012, it is normal enough that somebody on illness benefit with a permanent medical issue would transfer to invalidity pension. However, this appears to have fallen between some cracks back then and was never followed through. It is NOT means tested - there's a separate social assistance scheme for people without a contribution record which is means tested, but clearly this wouldn't apply to you as you have a more than ample PRSI record to qualify for the non means-tested version.

It also strikes me that your subsequent enquiry at the SW office might have been misinterpreted as a query about either disability allowance or supplementary welfare allowance, both of which ARE means tested.

Anyway, best of luck and hope you get something out of it.
 
Finally I got Irish Life to send out my options.
Having read through them I'm lost to be honest so, if anyone could advise I'd really appreciate it.
I'm going to cash it in .....in total.

RPB has a surrender value of €35698, and I can take a lump sum tax free of €6632 and it says the remaining 29065 will be subject to normal taxation.

The alternative of €150 a month pension isn't appealing from 65...55 now and health issues would dictate 65 might be achievable but 70 I would doubt.

So, if I take the full amount, 6632 is tax free, and the 29065 would be taxed normally?

My other income is rental income which net after deductibles is about 9k , this is simply added to my wifes lower band as we are jointly assessed and I declare this when I fill out the annual Form 11.

Am I correct in the above? Irish Lifes literature isn't very clear.
 
ClubMan said:
Why isn't the tax free lump sum 25% = €8,925?
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Thank you , I have asked that question myself and I don't know why.

They know my age and I have given them all the details regarding my salary from 6th of June 1999 to April 2002.

I thought it might be charges
 
You should query that with them.
Or maybe somebody else here can explain.
€2,300 seems an awful lot to be disappearing in charges.
 
I wish people would stop using jargon that isn't obvious to regular people. I had to look it up and presume that "TFC" means "tax free cash" i.e. the tax free lump sum?
 
There should be two methods of calculating the lump sum mentioned on the options letter. One is calculated using your salary and service and the other is a simple 25% of fund. I suspect that the one you quote above is based on salary and service. This method doesn't suit you in my opinion as it requires you to buy an annuity (fixed income for life) with the balance of the fund.

From what you are saying here I'd say you'd be better off taking 25% of the fund as a tax-free lump sum. If you then take the remaining 75% as a taxable lump sum, would that amount push you into the higher rate of tax, when your wife's income is taken into account? If so, an alternative would be an Approved Retirement Fund (ARF) from which you could withdraw lumps each tax year that would be of a sufficient size to keep you just below the 40% tax rate. For example, it's possible to set up an ARF and withdraw it all over 2 or 3 years.

One point if you're planning to withdraw the entire fund immediately ... what Irish Life fund(s) is it invested in? If it's invested in a fund that itself invests in equities and bonds, fund values are volatile at the moment. You could consider instructing Irish Life to switch your fund into their Cash Fund to freeze its current value while you make up your mind, gather paperwork to put in your retirement claim etc.
 
Dave Vanian said:
There should be two methods of calculating the lump sum mentioned on the options letter. One is calculated using your salary and service and the other is a simple 25% of fund. I suspect that the one you quote above is based on salary and service. This method doesn't suit you in my opinion as it requires you to buy an annuity (fixed income for life) with the balance of the fund.

From what you are saying here I'd say you'd be better off taking 25% of the fund as a tax-free lump sum. If you then take the remaining 75% as a taxable lump sum, would that amount push you into the higher rate of tax, when your wife's income is taken into account? If so, an alternative would be an Approved Retirement Fund (ARF) from which you could withdraw lumps each tax year that would be of a sufficient size to keep you just below the 40% tax rate. For example, it's possible to set up an ARF and withdraw it all over 2 or 3 years.

One point if you're planning to withdraw the entire fund immediately ... what Irish Life fund(s) is it invested in? If it's invested in a fund that itself invests in equities and bonds, fund values are volatile at the moment. You could consider instructing Irish Life to switch your fund into their Cash Fund to freeze its current value while you make up your mind, gather paperwork to put in your retirement claim etc.
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Thank you , I'll have to get onto them and work out the figures
 
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