Pension drawdown

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timberman

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Hi first post here ,
I’m 56 with 210k in a DC fund and a deferred DB of 22k , I got a transfer value of db circa 300k …. I was thinking of taking this due to poor family health history making 510k of a pot .
If I wished to retire at 60 before my work age of 65 , I can take 25% tax free and can I put all the 75% into an arf and draw as I wish or do I have to buy an annuity for 12,700 ??
 
timberman said:
Hi first post here ,
I’m 56 with 210k in a DC fund and a deferred DB of 22k , I got a transfer value of db circa 300k …. I was thinking of taking this due to poor family health history making 510k of a pot .
If I wished to retire at 60 before my work age of 65 , I can take 25% tax free and can I put all the 75% into an arf and draw as I wish or do I have to buy an annuity for 12,700 ??
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The €12,700 / AMRF requirement is with O’Leary in the grave.

So 25% tax-free, 75% into an ARF.

The 25% tax-free is capped at €200k, with any 25% amount above that from €200-500k taxed at 20%.

e.g. €1.2m pot, €200k tax-free, €100k taxed at 20%, €900k into ARF.
 
timberman said:
Hi first post here ,
I’m 56 with 210k in a DC fund and a deferred DB of 22k , I got a transfer value of db circa 300k …. I was thinking of taking this due to poor family health history making 510k of a pot .
If I wished to retire at 60 before my work age of 65 , I can take 25% tax free and can I put all the 75% into an arf and draw as I wish or do I have to buy an annuity for 12,700 ??
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I’m not an expert but 300k for 22k doesn’t seem like good value. I’d do more research and get opinions /advice before deciding to transfer,
Perhaps the timing of the transfer value statement wasn’t good re the factors that determine it.
It may improve closer to 60.
 
Thanks for that - yes colleagues said to me you should leave it till the last minute to transfer DB as they you more times at 59 than 56 ??
It’s good that the 12,700 is gone so I could draw down the 75% as I see fit … obviously I’d take more from 60 to 66 and then if I’m alive I’d have my state pension to supplement my dc pension .
My plan is to take 125k of the circa 500 at age 60 … take 36k (3k per month) until 66 and take 20k per annum thereafter with the state pension as well . My father passed away at 63 my uncle 59 and my own health is patchy as well so that’s why I’m keen to retire at 60 and see some bit .
I appreciate peoples responses and thoughts
 
timberman said:
Thanks for that - yes colleagues said to me you should leave it till the last minute to transfer DB as they you more times at 59 than 56 ??
It’s good that the 12,700 is gone so I could draw down the 75% as I see fit … obviously I’d take more from 60 to 66 and then if I’m alive I’d have my state pension to supplement my dc pension .
My plan is to take 125k of the circa 500 at age 60 … take 36k (3k per month) until 66 and take 20k per annum thereafter with the state pension as well . My father passed away at 63 my uncle 59 and my own health is patchy as well so that’s why I’m keen to retire at 60 and see some bit .
I appreciate peoples responses and thoughts
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Best wishes to you on your health.
I finished working a couple of years early and don’t regret it for a second.
The extra quality time I've spent with loved ones could not have been bought back if I’d stayed.
 
timberman said:
Thanks for that - yes colleagues said to me you should leave it till the last minute to transfer DB as they you more times at 59 than 56 ??
Click to expand...

Not trying to influence you one way or another, but this isn't always true. A Defined Benefit scheme is one big pot of money for all members. If it so happens that the investments of the DB scheme take a big fall in value between when you're 56 and 59, you could find that the transfer value offered at 59 is lower than at 56. I'm not saying that this is likely to happen in your case. Just pointing out that it's not always a certainty that your transfer value will go up over time.
 
Although in good health, I retired a week before my 60th birthday and haven't regretted it for a single solitary second. Not once have I thought "what if" or wished myself back at work. For the fortunate among us, our sixties are the "new 40s" with energy, enthusiasm, zest for life, debts hopefully behind us, a reasonable income, reasonable health and reduced responsibilities. Who would want to be dealing with e-mail and sitting at meetings dealing with HR issues, Compliance, performance reviews, 24 hour availability etc etc.

My father's father, his grand fathers, his uncles etc all died at or before 65. My father smoked all his life, ate cholesterol, fat and sugar for breakfast, dinner and tea and lived to 88, in rude health to 87. So don't be counting chickens or writing yourself off based on medical history, the world of medicine and health has changed immeasurably !

Do you know if the DB scheme allows for early retirement at 60 and would it be worth looking at this as an option ?

You should also look at the requirements in relation to jobseekers and the over 65 benefit payment and see what your options are in regard to these. The extra 10k-25k (total, not annual) that these could yield would be useful but you need to plan for them to ensure eligibility.
 
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There is an almost limitless supply of free and accurate financial advice shared on AAM.

I also like the way when, as in this post, some “life” advice and experiences are shared. It helps to keep it all real.
 
I know if I stop working at 60
Freelance said:
Although in good health, I retired a week before my 60th birthday and haven't regretted it for a single solitary second. Not once have I thought "what if" or wished myself back at work. For the fortunate among us, our sixties are the "new 40s" with energy, enthusiasm, zest for life, debts hopefully behind us, a reasonable income, reasonable health and reduced responsibilities. Who would want to be dealing with e-mail and sitting at meetings dealing with HR issues, Compliance, performance reviews, 24 hour availability etc etc.

My father's father, his grand fathers, his uncles etc all died at or before 65. My father smoked all his life, ate cholesterol, fat and sugar for breakfast, dinner and tea and lived to 88, in rude health to 87. So don't be counting chickens or writing yourself off based on medical history, the world of medicine and health has changed immeasurably !

Do you know if the DB scheme allows for early retirement at 60 and would it be worth looking at this as an option ?

You should also look at the requirements in relation to jobseekers and the over 65 benefit payment and see what your options are in regard to these. The extra 10k-25k (total, not annual) that these could yield would be useful but you need to plan for them to ensure eligibility.
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I know if I stop working at 60 I’d get stamps for 9 months but seen as I wouldn’t be looking for work really welfare would stop at that stage not to mind when I get to 65 … thought it would be 66 before I get state pension …
 
timberman said:
Thanks for that - yes colleagues said to me you should leave it till the last minute to transfer DB as they you more times at 59 than 56 ??
It’s good that the 12,700 is gone so I could draw down the 75% as I see fit … obviously I’d take more from 60 to 66 and then if I’m alive I’d have my state pension to supplement my dc pension .
My plan is to take 125k of the circa 500 at age 60 … take 36k (3k per month) until 66 and take 20k per annum thereafter with the state pension as well . My father passed away at 63 my uncle 59 and my own health is patchy as well so that’s why I’m keen to retire at 60 and see some bit .
I appreciate peoples responses and thoughts
Click to expand...
Quick question as I have a similar-ish plan from age 60.

A sum of €125,000 will surely only last 3 1/2 years before running out if you are drawing €36k p.a. You’ll still have 2 1/2 years to fund until you hit 66. Am I missing something OP?

g
 
Jobseekers Benefit is payable for 9 months, €232 per week or €9,048 in total, and it does not have to be claimed immediately upon ceasing work. However "If you are over 65 or turn 65 while receiving Jobseeker's Benefit you may continue to receive your payment up to your 66th birthday. This applies even if your claim is due to end before that date." So supposing you started claiming Jobseekers benefit when you reached 64 and 4 months, you would be entitled to continue receiving it up to your 66th birthday. Again, you need to meet certain requirements, the most challenging being to have 39 PRSI contributions paid from employment or credited in the governing contribution year (the second year before the year of the claim).

There is a transitional payment available to those reaching 65, known as the Over 65 Benefit Payment, subject to a byzantinely complex set of eligibility criteria. The rate is the same as Jobseekers Benefit, €232 per week or €12,296 pa. Key issue for early retirees (those who retire before reaching 63) is meeting these requirements, in particular the requirement to have PRSI contributions, paid and/or credited, in the governing contribution year. Not impossible, but takes some planning.

You are correct, 66 is state pension age.

I don't want to derail the thread, and turn it into yet another discussion on State benefits, I'm merely point out that if you have paid PRSI during your working years, you should do your homework now to ensure that you gain maximum benefit from your contributions. the rules are complicated, and foresight helps ensure that you don't get tripped up by some inane technicality.
 
garbanzo said:
Quick question as I have a similar-ish plan from age 60.

A sum of €125,000 will surely only last 3 1/2 years before running out if you are drawing €36k p.a. You’ll still have 2 1/2 years to fund until you hit 66. Am I missing something OP?

g
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I believe the funding for the €36k pa is from a retirement product like an ARF where the OP will invest the balance of this retirement fund ie c€375k.
 
garbanzo said:
Quick question as I have a similar-ish plan from age 60.

A sum of €125,000 will surely only last 3 1/2 years before running out if you are drawing €36k p.a. You’ll still have 2 1/2 years to fund until you hit 66. Am I missing something OP?

g
Click to expand...
Yes I will take 125k lump sum and then take 36k each year for 6 years out of the 375k leaving me with 195k in arf at 66 of which I’ll take 20k along with state pension until 75/76 I’m still around assuming no growth in arf
 
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