# Small pension pots as cash free lump sum



## moneybox (9 Dec 2014)

In the past I build up a small pension currently worth circa €31,000 with the CWPS scheme. I currently live in UK, over here we are now allowed to take the whole amount of small pension pots as cash lump sums.

Does anyone know if a similar stance will be taken with regarding small pension pots in Ireland??   I believe currently I can take 25% as a cash free lump sum and then I would have to buy one of those silly annuities with the rest of the fund giving me a yearly pension if i am lucky of a few hundred euro a year   I would much prefer and it would make financial sense to have the option of taking the €31000 as a lump sum where I can have the option to invest it as I please.


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## Steven Barrett (10 Dec 2014)

If the pot is under 20k after the tax free lump sum, you can take the whole lot out in one go.


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## moneybox (10 Dec 2014)

Thank you very much for that, I have some way to go before retirement rather funny to have to say this but I hope I don't surpass the stated amount.


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## twofor1 (13 Dec 2014)

SBarrett said:


> If the pot is under 20k after the tax free lump sum, you can take the whole lot out in one go.


 
Would any withdrawl above the tax free lump sum not be taxable ? or is there some excemption for pots with less than €20K remaining ? 

If there is such an excemption can you post a link to same.

Thanks.


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## moneybox (13 Dec 2014)

I would think you have to pay tax on anything after you take the tax free lump sum.

 From next year in the UK people can access all their defined pension contributions regardless of the pension pot size and not have to invest in an annunity. They has been a great response to this change though the insurance companies that have been paying out dismal annunities are non too pleased. 
I am hoping the Irish government will follow suit in the next few years.


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## Steven Barrett (15 Dec 2014)

twofor1 said:


> Would any withdrawl above the tax free lump sum not be taxable ? or is there some excemption for pots with less than €20K remaining ?
> 
> If there is such an excemption can you post a link to same.
> 
> Thanks.



It's called a trivial pension and is taxed at 10%. 

www.revenue.ie/en/about/foi/s16/pensions/chapter-07.pdf?download




moneybox said:


> I would think you have to pay tax on anything after you take the tax free lump sum.
> 
> From next year in the UK people can access all their defined pension contributions regardless of the pension pot size and not have to invest in an annunity. They has been a great response to this change though the insurance companies that have been paying out dismal annunities are non too pleased.
> I am hoping the Irish government will follow suit in the next few years.



Ireland is way ahead of the UK on this one. We have had ARF's since 1999. The only barrier is the AMRF where if you don't have a guaranteed income of €12,700 per annum, you must put €63,500 into an AMRF until you are 75 or purchase an annuity with that amount.

You know you can transfer your Irish benefits to the UK?


Steven
www.bluewaterfp.


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## twofor1 (18 Dec 2014)

SBarrett said:


> It's called a trivial pension and is taxed at 10%.


 

Thanks, I was not aware of that.

Is there a current ballpark amount that each €10K in a pot will produce annually in a pension for a man retiring at 65 ?


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## Gerry Canning (18 Dec 2014)

Takes circa k24 to buy K1 of an annuity pension if you retire @65.
Means your K10 if used to buy pension today would get you circa  420 per year.
From what I hear ,anyone would be mad to buy an Annuity Pension @ present .
From the threads people like SBarret have real knowledge.


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## twofor1 (18 Dec 2014)

Gerry Canning said:


> Means your K10 if used to buy pension today would get you circa 420 per year.


 
Thanks, 

If one was to take the €10K, after tax it becomes €9K, even a DIRT exempt pensioner would not get anything near €420 annually by putting this amount on deposit.

But then again €8 a week is not going to dramatically improve anyone’s lifestyle, might be better to take the €9K and blow it on a few holidays or a car, there's no pockets in a shroud


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## moneybox (19 Dec 2014)

> Ireland is way ahead of the UK on this one. We have had ARF's since 1999. The only barrier is the AMRF where if you don't have a guaranteed income of €12,700 per annum, you must put €63,500 into an AMRF until you are 75 or purchase an annuity with that amount.



Most people with small pension pots wouldn't have a guaranteed income of €12,700 per annum unless the state pension is taken into account and even that amount is not sufficient and how many of us will be alive by the time we are 75?



> You know you can transfer your Irish benefits to the UK?



Considering the high cost of sterling at the moment it wouldn't be worth it.


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## Steven Barrett (19 Dec 2014)

Gerry Canning said:


> From what I hear ,anyone would be mad to buy an Annuity Pension @ present.



It very depends Gerry. Yes, the annuity rates are low and will probably stay low for the next number of years. But it is a guaranteed income for life. You get your annuity and off you go. 

With the ARF, you not have a guaranteed income for life. You have to worry about investment risk and the possibility of your fund bombing out in the future. 

Then there's the taxed cash option but I have never come across someone who's done that. 

For anyone coming up to retirement, they should look at both options and the pros and cons of each before making an informed decision. 


Steven
www.bluewaterfp.ie


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