# Deferred Pension Plan - what are my options



## paulsm (4 May 2015)

I am a member of a pension plan with a company that I left in 2004.  I was medically retired in 2008 and I am 55 years old.   Can I draw from this pension now?  I previously contacted the company and requested early retirement from the plan as I am medically retired, but they said "not at this time".  Is a Personal Retirement Bond an option for me ?  Are there other options? They have advised me of the current transfer value.   Thank you.


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## Gordon Gekko (4 May 2015)

Good morning

What is the transfer value?

As you are now over 50, it should be possible for you to retire from this plan (i.e. "ARF" or buy an annuity).

Moving to a PRB should always have been an option.

It doesn't sound like the company has covered itself in glory here.


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## Steven Barrett (4 May 2015)

paulsm said:


> not at this time



What?!! 

As you took ill health early retirement, you can draw down the pension at any time. If that is what you want to do, tell them you want to mature your pension and if they tell you "not at this time" again, you'll report them to The Pensions Authority. 


Steven
www.bluewaterfp.ie


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## paulsm (5 May 2015)

Gordon Gekko said:


> Good morning
> 
> What is the transfer value?
> 
> ...



thank you, I will contact the company again.  as far as I know, the pension plan is a group scheme, does this make a difference?


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## paulsm (5 May 2015)

SBarrett said:


> What?!!
> 
> As you took ill health early retirement, you can draw down the pension at any time. If that is what you want to do, tell them you want to mature your pension and if they tell you "not at this time" again, you'll report them to The Pensions Authority.
> 
> ...


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## Steven Barrett (5 May 2015)

paulsm said:


> thank you, I will contact the company again.  as far as I know, the pension plan is a group scheme, does this make a difference?



None whatsoever. Revenue rules state that if you draw down your pension benefits at any age if you retire due to ill health. 

Steven
www.bluewaterfp.ie


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## elacsaplau (5 May 2015)

Hi Paulsm

If you are in a DB plan (which I suspect to be the case from your original post) - whether you can take your pension early, through illness or otherwise, will depend on the rules regarding the early payment of deferred pensions as set out in the Trust Deed & Rules governing the plan. Normally, there is a condition in this rule that the early payment is subject to the consent of the trustees.

The reason why trustees might have said "not at this time" is because if they allowed you to early retire, you would move from being a deferred member to a pensioner member. This is relevant as where a plan winds-up (and is not fully solvent), certain category of members (i.e. pensioners) have a higher ranking when it comes to the distribution of the plan's assets. It follows that by allowing you to "early retire", the trustees would be positively discriminating in your favour - to the possible detriment of other members - and this, they cannot do.

It may be that the solvency of the plan has improved so that the trustees can now facilitate your request (or some other technical reasons may apply) - so that it is possible that your request could be accommodated now. Just thought you should be aware of this before reverting to the trustees/employer.

Just to be clear, if this plan is a DC plan - there is no reason why you can not access your benefits now - and you should have been allowed access to them previously.


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## paulsm (6 May 2015)

elacsaplau said:


> Hi Paulsm
> 
> If you are in a DB plan (which I suspect to be the case from your original post) - whether you can take your pension early, through illness or otherwise, will depend on the rules regarding the early payment of deferred pensions as set out in the Trust Deed & Rules governing the plan. Normally, there is a condition in this rule that the early payment is subject to the consent of the trustees.
> 
> ...



Thank you Elacsaplau.    Yes, the plan is a Deferred Pension Plan.   I contacted the company today and you are absolutely correct.  The rules of the deferred plan state that it is at the discretion of the trustees as to whether they allow early retirement.  I was hoping that being medically retired would have made a difference.  However, they also confirmed that I can transfer to a Personal Retirement Bond.   If I did this, could I retire myself using this bond  if I were to transfer some capital into a new Pension Plan?   Thank you for your help !.


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## paulsm (6 May 2015)

SBarrett said:


> None whatsoever. Revenue rules state that if you draw down your pension benefits at any age if you retire due to ill health.
> 
> Steven
> www.bluewaterfp.ie[/QUOTE]
> ...


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## elacsaplau (6 May 2015)

Hi Paulsm

I'm sorry that the trustees can not accommodate your request.

You may need to get advice on your options to help clarify which is the best move for you now.

In particular, whilst you do have immediate access to your funds - via a transfer payment into a PRB - you will need to appreciate that the transfer payment ordinarily represents very poor value compared with the deferred pension. This poor value is exacerbated by the likelihood that the scheme is insolvent (as why else would early payment on an actuarially neutral basis be declined?) in which case the transfer payment will be further reduced to reflect the degree of the plan's insolvency. Was this mentioned to you? The impact of all this being a further reduction in the transfer payment and its relative value.

Of course, the complication arises in that you may feel a far greater need for money now rather than wait for years down the line. No doubt, your health and family status, together with any possible impacts on social welfare entitlements will be relevant also.


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## Steven Barrett (6 May 2015)

paulsm said:


> he rules of the deferred plan state that it is at the discretion of the trustees as to whether they allow early retirement. I was hoping that being medically retired would have made a difference.



I am very surprised at this. Taking early retirement from any scheme, defined benefit or defined contribution is wholly at the trustees discretion. In the case of underfunded defined benefit schemes, it is understandable why the don't allow early retirement. 

Ill health early retirement is completely different though. I would ask for a copy of the scheme rules (which you are entitled to) to see what the rules are under ill health early retirement. 

Steven
www.bluewaterfp.ie


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## JoeRoberts (6 May 2015)

SBarrett said:


> I am very surprised at this. Taking early retirement from any scheme, defined benefit or defined contribution is wholly at the trustees discretion. In the case of underfunded defined benefit schemes, it is understandable why the don't allow early retirement.
> 
> Ill health early retirement is completely different though. I would ask for a copy of the scheme rules (which you are entitled to) to see what the rules are under ill health early retirement.
> 
> ...


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## paulsm (7 May 2015)

Hello, Joe, thank you for your reply.  If the revenue rules state that individuals are allowed early retirement on their pensions if they are medically retired, then why would not this apply to me?  I am not an OP yet thank God.  I will ask the company for the rules under ill health in the scheme.   I am 55 years old and I am just trying to get access to my pension, be it through a personal retirement bond or otherwise.


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## paulsm (7 May 2015)

SBarrett said:


> I am very surprised at this. Taking early retirement from any scheme, defined benefit or defined contribution is wholly at the trustees discretion. In the case of underfunded defined benefit schemes, it is understandable why the don't allow early retirement.
> 
> Ill health early retirement is completely different though. I would ask for a copy of the scheme rules (which you are entitled to) to see what the rules are under ill health early retirement.
> 
> ...


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## paulsm (7 May 2015)

elacsaplau said:


> Hi Paulsm
> 
> I'm sorry that the trustees can not accommodate your request.
> 
> ...



Hello elacsaplau and thank you for relying again to me.    What you are saying makes complete sense to me.   I guess the company would consider my request for early retirement or retirement due to ill health if the scheme was solvent.  I was with the company for 27 years.  So, if my only option is a Personal Retirement Bond, I will seek personal financial advice on it.   The company has advised the transfer value, they sent me a statement and said that the value is dependent on my age and my earnings from other pension plans (which I don't have) to ensure I do not breach Revenue limits.   My ultimate goal here is to improve my income.  Another issue which is bothering me is that if I do nothing now, and I die before retirement age, the company has stated that on leaving service, cover ceased for death benefits provided by the pension scheme.  So it would be all gone anyway.  At least with a PRB I would at least get something.


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## Steven Barrett (7 May 2015)

> Why should someone be entitled to gain preference as a pensioner in payment just because they suffer ill health ?
> 
> The main issue here that needs to be rectified in DB schemes is the preference given to pensions in payment. It distorts the whole equality within a scheme and prevents logical resolution of problems such as that faced by the OP.



Have a bit of empathy. Ill health early retirement provisions are put in place to look after those who are unable to work on medical grounds. Medical reports have to be submitted and the doctor has to declare that the person cannot work due to their illness. 

Deferred pensions do get an element of protection now.


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## elacsaplau (7 May 2015)

Hi Paulsm

I empathise with your situation - it must all sound very legalistic. I will try to simply summarise some points which hopefully will help with your deliberations. Whilst most of what is to come may not be exactly what you would have hoped for - I think I may be able to allay one of your concerns.

1. The Revenue Rules can be viewed as primarily setting out maximum benefits and Revenue controls under pension plans generally;
2. The Trust Deed & Rules (TD&Rs) of individual plans set out the precise terms for individual plans and must not exceed the maximum benefits as set out in the Revenue Rules;
3. Under Revenue Rules, you may receive your benefits now;
*4. The key terms of relevance to you are therefore the terms of the TD&Rs *(and associated relevant pension documentation);
5. There is often confusion regarding what specific rule is to apply in your case. Instinctively, people tend to refer to the specific rule regarding "early retirement" in the TD&R;
6. However, the early retirement rule deals with current employees wishing to immediately transition from being an employee to becoming a pensioner;
7. The relevant rule for you is to be found in the "leaving service section" of the TD&R - and refers to the early payment of a deferred pension;
8. A typical example of the legal style wording of this would be along the lines of: "where a Member is entitled to a deferred pension, the Trustees may at their discretion pay benefits earlier than Normal Retirement with such benefits being reduced as the Trustees decide."
9. I have never seen a Rule (as per 8 above) which did not leave the early payment of a deferred pension at the trustees' discretion - and so the advices you have been getting from the trustees are completely plausible;
10. It is worth remembering that there is a different relationship between you and the employer compared with a current employee and the employer - in that the employer may decide to facilitate an active employee to retire rather than have such an employee remain as part of its headcount with possible sick pay obligations, etc., whether insured or not;
11. In other words, and getting very technical here, the employer in point 10 may be happy to fund the solvency strain caused by the immediate retirement of an active employee but not similarly happy to so do for a former employee;
12. It may sound and, in reality, be harsh - but the same motivation does not exist for the employer in your case - there may be a bit of the "when you're gone, you're gone" mind-set;
13. It summary, therefore, I suspect when you get a copy of the TD&R, it will only serve to confirm what the stated position of the Trustees, all along - i.e. you can not retire now from the plan but you can take a (reduced?) transfer to a PRB;
14. I promised you a little good news! In the same "leaving service rule", you should see a sub-rule which deals with the death of a deferred member during the period of deferment. Typically, this will be along the lines of "In the event of the death of a Deferred Member before Retirement, there shall be payable to the Member's Personal Representatives an amount equal to the actuarial value of the Deferred Pension" - which, in English, ordinarily means that the then transfer value would be payable to your estate - i.e. the deferred pension has not died in the event of your passing between now and age 65.

The fact that you have 27 years pension benefit accrued means that this is a very important decision for you. Your inclination seems to be to take your benefits as soon as possible - which I can understand, notwithstanding my caveats in earlier posts. You need to take professional advice!


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## Ravima (7 May 2015)

Trustees must look after the interests of ALL employees. It might not be in the interests of ALL to let one retire early. That's why there are rules. I suppose if A was a brain surgeon and B was a petrol pump attendant, both under DB schemes, it might be easier for A to retire on ill health, say for example he developed Parkinsons than B. You would not want your brain surgeon to have Parkinsons, but the lad giving our the petrol might be OK. It might read harsh, but hard cases make for bad law!


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## paulsm (8 May 2015)

elacsaplau said:


> Hi Paulsm
> 
> I empathise with your situation - it must all sound very legalistic. I will try to simply summarise some points which hopefully will help with your deliberations. Whilst most of what is to come may not be exactly what you would have hoped for - I think I may be able to allay one of your concerns.
> 
> ...



Hi elacsaplau.

Again thank you for your reply.  It certainly has been an education for me these last few nights !.  What you have explained is of great help to me and I totally agree with you on points 10, 11 and 12 (unfortunately).  I am now going to ask the company for a copy of the TD & R and will then seek independent financial advice.   I feel I understand a lot more now than I did at the start of the week and feel more confident now to meet with a financial adviser.  Thank you so very much for that.  My best regards to you, P.


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## paulsm (8 May 2015)

Ravima said:


> Trustees must look after the interests of ALL employees. It might not be in the interests of ALL to let one retire early. That's why there are rules. I suppose if A was a brain surgeon and B was a petrol pump attendant, both under DB schemes, it might be easier for A to retire on ill health, say for example he developed Parkinsons than B. You would not want your brain surgeon to have Parkinsons, but the lad giving our the petrol might be OK. It might read harsh, but hard cases make for bad law!



Thank you Ravina for your reply....I wish it was not so complicated....I am now going to seek independent financial advice.


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## Homer (25 May 2015)

Hi Paulsm

You say that you were 'medically retired' in 2008.  What exactly do you mean by this?  Are you currently in receipt of disability benefit?  If so, you would probably lose any further payments if you decide to take early retirement. 

Your situation sounds quite complicated and an internet discussion board may not necessarily be the best place to get appropriate advice.


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