Pension options - where to go

M

mariemarie

Registered User
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1
Hello, this is my first time posting so hopefully I can make myself clear..

I left a large organisation a couple of years ago but officially have just reached retirement age.

The pension people have written to me with the following options:
  1. 3k p.a. + AVCs of 94k
  2. 3k p.a. and Lump sum of 8k* + AVCs of 86k
I had had the impression that I could take 25% of my TOTAL funds (standard AND AVC) tax free?

The 3k p.a. I presume is an annuity so I would have expected that would be funded by something like 100k, so when added to my AVCs I would have thought the total funds should be c. 194k which I had hoped would give a tax free lump sum of c. 48k?

I will not be in receipt of the OAP until next September. I am wondering if the 8k referred to in option 2 is because I will not meet the minimum requirement of €12,700 p.a. until then. If that is the case could I defer drawing down any of my funds until next September and then drawdown a much larger tax free lump sum?

If I was able to defer until September could I / should I then opt for an ARF or AMRF?

This is a very big decision for myself and my family and I am not an expert in this area so any advice would be very much appreciated.

M
 
H Marie

It appears you are in the defined benefit scheme. The tax free lump sum is calculated based as a percentage of final salary, so the 25% tax free lump sum does not apply.

You can put the AVC's in an ARF or purchase an annuity with it. If you want to avoid the AMRF for your AVC's, you can always just not return any of the forms until next year when you have the OAP and together with the €3,000 private pension, have over €12,700 in guaranteed income.

Steven
www.bluewaterfp.ie
 
SBarrett said:
The tax free lump sum is calculated based as a percentage of final salary,
Click to expand...

Is there a formula for working this out? I have tried to work this out from figures sent to me from Mercer. They just will not respond to my requests for this information.

Also is it based on final salary or if an integrated pension the pensionable salary?
 
You have to look at the scheme rules for their definition of final salary.

Mercer usually do a good job in laying out the options available to you...when they reply that is!

You can get all the formula's etc in the Revenue pensions manual online
[broken link removed]

Steven
www.bluewaterfp.ie
 
Hi Steve, mariemarie worked with me - I actually advised her to go to AAM on this topic but apparently because she's new to AMM she is restricted in terms of postings so here are some supplementary questions:

  • I guess what I'm trying to figure out is how can I maximise the amount of cash tax free over the next 12 months?
  • An annuity does not sound attractive given current rates.
  • If it were you, would you go for the ARF option now or hold off on returning the AMRF forms until next September?

I really appreciate your help so far on this.

marie
 
Hi Maire

  1. The tax free figure should be the maximum provided. There are clear Revenue rules on how much you can take tax free based on your years service and salary.
  2. No, annuity rates are not attractive at the moment
  3. I can't answer that. Do you need the pension money now? Do you have other sources of income for the next year? Will being limited to taking 4% of the fund be a hinderance to you (some people are quite happy to put €63,500 out of the Revenue's hands until they are 75).
I am presuming you have reached normal retirement age on the plan? If not, you can ask the trustees to take a transfer value and transfer the money into an Buy Out Bond, where the 25% tax free cash is available.


Steven
www.bluewaterfp.ie
 
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