Importance of Retirement Age on PRB and Pension

[David_Dublin]

Hi - I'm sure this is a stupid question, but I just don't know the answer.

What is the relevance of the Retirement Age on one's PRB and/or Pension?

My unerstanding in relation to my PRB, for example, is that from age 50 I can withdraw up to 25% / max €200,000 tax free. i.e. I decide the age when I retire this PRM. Then I have to invest in an ARF, and draw down 4% of the ARF value from when I take the lump sum. The PRB has a retirement age of 65.
Does this just mean that if I haven't taken lump sum by 65 I would need to do so then, but can take lump sum any time I like between age 50 & 65.

Same question re my "current" pension, bog standard company scheme with Irish Life. Again, the age is 65. I doubt I'll be working for them until 65. If I left that employment, I could transfer elsehwere, subject to scheme rules. But wondering what the relevance of the age is?

 

[Dave Vanian]

Does this just mean that if I haven't taken lump sum by 65 I would need to do so then, but can take lump sum any time I like between age 50 & 65.

No. You can defer the retirement until 70 if you want.

If you're going to take it before 65, check that your specific policy doesn't have any penalties for retiring before the normal retirement age (NRA), or bonuses for waiting until the NRA.

The NRA on any occupational pension scheme can be set as anything between 60 and 70. In your case, the NRA on your current scheme is 65. If you want to retire before the NRA you need to have left the employment of the company (and gotten rid of any shares you hold if you're a shareholding director). With the PRB you've obviously already left that company so that's not relevant. With the current scheme you have to leave the company if you want to go before 65.

Some schemes have investment strategies that tailor your investments around the assumed retirement age. So, for example, they might gradually switch into lower-risk assets in the years coming up to your 65th birthday. If you retire early you're messing up that investment strategy. So you need to check if either your PRB or current scheme is part of an investment strategy (known as lifestyling) based on an assumption that you'll retire at 65.

 

[David_Dublin]

Thanks a mill for that great info