PRSA v Personal Retirement Bond - where can I find out more?

[3dolls]

I've had a look in the key posts, but still no wiser

Was in a DB scheme for 14 yrs, made redundant in 2006. At the time I made the pension paid-up. I'm at home with my children since, so didn't have a new employer to transfer to.

The scheme is being wound up now, and I have to make a decision. My options are either a PRSA or a PRB, and I want to read up on the differences between them. I plan to talk to an independant financial advisor - specifically a pension advisor? But before that I want to find out as much as I can so I know what questions to ask. I suppose I need a side-by-side comparison of the two, with pros and cons of each.

I'm not planning to return to the workforce in the short-term (unless circumstances change dramatically). Would this be relevant to my decision? Also, since I'm not currently a tax-payer, then I assume we would be better off paying AVCs into my spouse's pension to avail of tax-relief, rather than paying anything into a PRSA or PRB that I set up (is it even permitted to make payments into either?). Or would I be able to file a tax-claim at the end of the year if I was able to pay in? The more I think about it, the more I realise how clueless I am!

The key-post on retirement bonds dates back to 2004 - has there been any changes since then?

The timing is not very reassuring with the way the stock markets are right now but I have no choice on the matter, unfortunately.

 

[LDFerguson]

Quick summary: -

Buy Out Bond (Personal Retirement Bond) - no future contributions allowed, just the transfer from your old scheme. Same rules on retirement as per the original scheme, i.e. if you were not a 5% director of your previous employer, you'll only have the option of lump sum and annuity at retirement. Charges should be lower than a PRSA.

PRSA - Future conributions can be made, but only advisable if you're going to be getting tax relief for them. More flexible at retirement - Approved Retirement Fund (ARF) option possible. Charges might be higher than Buy Out Bond.

 

[3dolls]

Thanks so much for that - it's going to help me to know what questions to ask the IFA. Must do some more research - have been looking at the Pension Board's website, and your definitions will help me to understand their documentation better.

 

[bouldthady]

Thanks so much for that - it's going to help me to know what questions to ask the IFA. Must do some more research - have been looking at the Pension Board's website, and your definitions will help me to understand their documentation better.

If aged over 50 and were made redundant, left service or took early retirement, you can take 25% of the Fund through a PRSA. On death also in a PRSA the fund is passed to the spouse/estate. There is no annuity trap within a PRSA and as Liam rightly outlined above you can continue to contribute to a PRSA. This is ideal especially if you are self employed like myself. The PRSA can also be used as an AVC option if you join a new company pension scheme. There are also less restrictions on investments within a PRSA and the PRSA can be continued to age 75 if you so wish.