# Personal Retirement Bonds (PRBs)



## Marathon Man (18 Jun 2003)

Along with several hundred others, I was laid off when IFI went into liquidation, last November.

I recently got details of our options.  Apparently there are 4 choices:
1  Take a (reduced) pension now (over 50's only)
2  Transfer the fund into a new employers pension
3  Transfer into a PRSA (Providing one has less than 15 years service)
4  Take out a Personal retirement Bond (PRB)

Questions:

A) Why do the Irish Pensions Board not allow people in my situation to transfer the fund into a PRSA?  Surely that was one of the intentions of the PRSA?

B)  Wghat are the advantages (??!!) and pitfalls of PRBs?

I am currently contracting (self employed - limited Co.)

I have to decide what I'm doing before Sept 1st., or the Trustees of the scheme will decide for me.

Any help/advice appreciated.  Thanks in advance.


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## ClubMan (18 Jun 2003)

*Why do the Irish Pensions Board not allow people in my situation to transfer the fund into a PRSA? Surely that was one of the intentions of the PRSA?*

I think that the rule for people like you (with 15+ years service in the occupational scheme) may be there to protect such schemes which comprise long serving members and to prevent an exodus undermining the viability of the scheme as a whole? However I'm not sure...

I guess the IFI pension scheme is being wound up in some fashion given that you don't have the option of leaving your fund in the scheme? Personal retirement bonds or buy out bonds are simply like standalone pension funds which are not part of a larger scheme. One advantage over having one or more funds elsewhere in occupational schemes is that administration is easier and you don't have to chase up occupational scheme trustees etc. when you have queries - you deal directly with the underwriter or their representative. One disadvantage is that (as far as I know) if you subsequently join another occupational scheme and have gone the PRB/BOB route then you are starting from scratch in terms of membership vesting time with the new scheme - whereas if you transfer in from another scheme you time served counts for vesting purposes in the new scheme. (Vesting periods relate to when you are guaranteed the benefit of employer contributions on leaving etc.). As with most investment products if/when you shop around for a PRB/BOB make sure that the charges are competitive and that the product offers you the required level of flexibility (e.g. choice of funds etc.).

There are others on AAM much more knowledgeable about pensions generally than I am so stay tuned and you may receive further comment from them.


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## Alan Moore (18 Jun 2003)

*PRB / PRSA*

I'm not aware of any provider taking transfers into PRSA's regardless of the service completed. It's an option but in reality it's not at present.

So if you are going to be self-employed and you are not yet 50 I reckon you only have one option i.e. transfer to a Personal Retirement Bond. It would be normal for the trustees to initiate a PRB in any event if they want to wash their hands of the scheme.

If you were to go back into another company Clubmans points on vesting are important.


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## ClubMan (18 Jun 2003)

*Re: PRB / PRSA*

_Marathon Man_ - if you decide to go the PRB/BOB route then  himself or  may be able to help/advise you. Alternatively you may want to shop around independently or find you own advisor. Just make sure that you get good independent, objective advice (which I'm sure _Alan_ or _Liam_ will give you) and not simply a sales spiel (e.g. from a sales person, tied agent representative or your local bank staff...)! Good luck.


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## Liam D Ferguson (19 Jun 2003)

Notwithstanding all of the above advice, if Marathon Man is now a director of a limited company (and I think he is from his post), he can set up an Occupational Pension Scheme with himself as member and transfer the IFI benefits into it.  

A decision would require comparison between the PRB option and the Occupational Scheme.  

Liam D Ferguson
[broken link removed]


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## Alan Moore (19 Jun 2003)

*Good point....*

Missed the Ltd Co,
Thanks


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## Marathon Man (19 Jun 2003)

*PRB's - Thanks*

Thanks everyone!

What I needed to hear was Liam's advice re Occupational Pension Scheme.   I'll follow this line up.

Thanks again!


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## Conan (19 Jun 2003)

*PRB etc*

If the individual is now trading as a Company (and he is a Co. Director), the best approach is to establish a Directors Pension Plan (not a PRSA) and seek a transfer value from the IFI Scheme (there are no 15 years rules in such a case).
In addition, under a Directors Pension Plan there is no 30% contributiob limit and as a Co Director, he can still avail of the Approved Retirement Fund option at retirement (in respect of all assets).


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## Marathon Man (4 Nov 2003)

*Transfer of Funds to EPP*

Firstly many thanks to everyone for the advice a few months ago re what to do with my funds following the liquidation of IFI.  I have opened an EPP and things are looking good.

I do however still have a MAJOR gripe and would like some advice on what to do/who to talk to.

In May I got a provisional transfer for both my pension and my AVC.  I have, in the past two weeks, been informed by my EPP pension provider that the pension transfer value has been reduced by 9.64% as a result of a revaluation by actuaries in mid Aug. and that the AVC value is exactly (to the cent) the same as in May.  

Neither pension nor AVC will actually be transferred until sometime this month or maybe Dec, depending on the transfer arrangements and expected Revenue approval.  I might add that the IFI provider has not informed me directly of any of these developments, other than to provide the May figures. 

The issues I have with this are that the valuation originally took place in May, markets have risen since, revaluation was done in Aug, with a dip in the market in Aug (coincidence?) and transfer will not take place until Nov/Dec.  As I see it, I am getting a VERY raw deal here.  

Comments/advice appreciated.

Thanks in advance.

Marathon Man


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## MM (6 Nov 2003)

*Bum Deal*

MM,

That sure seems like a bum deal. 

Would you tell us what type of investment vehicle the EEP scheme is in?  With-Profits? Unit-Linked Managed?

If you could tell us which company the EPP and AVC are with it would also help.  I suspect the EPP scheme is either a with-profits scheme with Standard or Scots Prov, and that the AVC is a unit-linked fund.

There'll be little you can do about the former, but I'd be shouting from the rooftops on the latter, assuming my guesses are correct.

Benny


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## Marathon Man (6 Nov 2003)

*Bum Deal*

Benny,
I'm ok with the EPP.  That's just started and I hope to transfer my IFI fund and AVC from AON (IFI provider)

The problem is that EPP provider has been informed by AON, that the fund value is being reduced by approx. 9.64%, from its May actuarial valuation and that the AVC transfer value is exactly the same as the May valuation.

I was obliged to inform AON, before Aug 15th, as to where to transfer the funds.  If I failed to do that they would open a PRB for me.

I told them in late June (thanks to advice here!) that I would be taking out an EPP, but it has taken until now to set up and arrange transfer.   

AON's latest, and, I understand, final, valuation was done in mid Aug.  My gripes are:
1) The IFI Provider has not informed me directly of the reduction nor the reason.
2) The latest valuation was carried out in Aug, while the transfer will not take place until Nov/Dec
3) The fact that the AVC valuation is exactly the same is beyond credibility.
4) Markets have risen since the original valuation.

ACC 101 preaches about the "Time value of money", however this transfer is like Bulmers: " Nothing added but time"

My instinct is to get my own actuarial assessment - the % drop in pension alone involves a good 5 figure sum, before I add the AVC.

I'm looking for advice/suggestions as to what I should do.

I really feel I'm getting the thin edge of this slice of cake.

Thanks in advance.

MM


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