# When do you get your pension cont. back?



## td2008 (5 Aug 2008)

Hi,
I will be leaving work just shy of my two year contract and am going to be getting my pension contributions back, just wondering does it get added to the last pay cheque or how does it work?
Thanks,
Tony


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## nhails (5 Aug 2008)

The pension scheme is a legally separate entity so you should be getting a separate cheque from the Trustees or from their administrators.  Certainly not via payroll.  

First though, there's some paperwork to be done.  You should receive a statement of leaving service benefits shortly after you leave.  Normally there is a form attached to that which you can fill out in order to instruct the payment to proceed.  The reason you need to do this is that - in most schemes - there is an option to retain the contributions in the scheme instead of taking a refund.

Because of this process, there can be a little delay before you get your cash (assuming you take that option).  If time is of the essence then let your HR people know and ask them to push it through for you!


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## LDFerguson (5 Aug 2008)

td2008 said:


> Hi,
> I will be leaving work just shy of my two year contract and am going to be getting my pension contributions back, just wondering does it get added to the last pay cheque or how does it work?
> Thanks,
> Tony


 
You know that by choosing to take a refund of your own contributions, you lose your employer contributions also as they get refunded to your employer?  This is not good from a long-term perspective, although maybe your employer offers you no choice in this regard.


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## ClubMan (6 Aug 2008)

tracytierney said:


> Also as you received tax relief on your contributions, what you get will be less 41%/20%, depending on your higher tax rate[broken link removed]


Are you sure? I thought that refund of personal/_AVC _contributions (where an occupational fund member has less than two years membership on leaving the job) were taxed at 20% so a high rate taxpayer "saves" 21% tax?


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## St. Bernard (6 Aug 2008)

That is correct. You get a refund of your own contributions less tax @ 20%. If you have a choice i would advise that you at least transfer the fund to a PRSA or Buy out bond thus retaining the employers contributions.


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## rmelly (6 Aug 2008)

I was aware of the 20% 'exit' tax in these circumstances regardless of the marginal rate of tax, but why is this in place? Is it intentional (and if so, why) or just a loophole that was never dealt with?


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## td2008 (6 Aug 2008)

Thanks for the replies.
I am aware that i can transfer my benefits but I've been here less than two years, i think i lose the employee contributions anyway since i didn't fulfill my contract, so my contributions only come to about 2 grand.
My date of resignation is August 22nd and I'm leaving September 3rd so that doesn't give me a whole lot of time if theres paperwork to be completed. 
I'll get onto my hr/pension department.

edited:
The two grand would be useful to me now as i plan to travel for the year


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## ClubMan (6 Aug 2008)

It is a bit of a loophole but the chances of being able to avail of it more regularly are presumably low? You would need to be leaving jobs with occupational pension schemes every 2 years or so.


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## ClubMan (6 Aug 2008)

td2008 said:


> Thanks for the replies.
> I am aware that i can transfer my benefits but I've been here less than two years, i think i loose the employee contributions anyway since i didn't fulfill my contract


The statutory vesting time for employer contributions is 2 years. In some cases employers may unilaterally reduce this. Double check that to see if you will lose them if you cash in *OR *if you leave the money in the scheme, transfer to another occupational scheme, transfer to a buy out bond etc.


> My date of resignation is August 22nd and I'm leaving September 3rd so that doesn't give me a whole lot of time if theres paperwork to be completed.


I don't think that there is necessarily any rush. Normally you can opt for transfer to another scheme or buy out bond any time after leaving. Not sure if an encashment decision needs to be made sooner.


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## PaddyW (7 Aug 2008)

From what I can understand, if you're less than two years in the pension scheme, you can get a refund of the contributions? What about if you had been there two or more years, would you be able to get the refund still, or would you have to leave it in some sort of pension fund and not be able to touch it?


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## shaking (7 Aug 2008)

When you leave a company you will be issued with leaving service options by the pension provider the norm is as follows:
*Less than 2 years service*
A) Take a refund of the value of your contributions less tax at 20%, the employers 
    contributions are returned to them 
B) Transfer the value of your contributions to another pension plan i.e. your new 
    employers pension plan a PRSA or Personal Retirement Bond the employers 
    contributions are returned to them 
C) Leave the value of your contributions where they are, they remain invested until 
    you reach retirement age, no further contributions can be made the employers 
    contributions are returned to them 

If you have *more than 2 years service*, you are entitled to both your and the employers contributions:
A) Transfer the value of the entire fund to another pension plan i.e. your new 
    employers pension plan a PRSA or Personal Retirement Bond 
B) Leave the value of your fund where they are, they remain invested until 
    you reach retirement age, no further contributions can be made 

As ClubMan pointed out some company's will give you automatic vested rights meaning you're entitled to their contributions even if you leave within 2 years. 

You can't do anything with your pension until you complete the leaving service options and this can take a bit of time as you have to sign it and then it has to be signed by the trustees too.


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## PaddyW (7 Aug 2008)

That's good to know. Fair play lads.


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## ClubMan (7 Aug 2008)

shaking said:


> When you leave a company you will be issued with leaving service options by the pension provider the norm is as follows:
> *Less than 2 years service*


Isn't it years of membership of the occupational scheme and not necessarily years of service that counts?


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## shaking (7 Aug 2008)

Yep, should have clarified it's pensionable service


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## boaber (7 Aug 2008)

rmelly said:


> I was aware of the 20% 'exit' tax in these circumstances regardless of the marginal rate of tax, but why is this in place? Is it intentional (and if so, why) or just a loophole that was never dealt with?





ClubMan said:


> It is a bit of a loophole



Not a loophole at all, Revenue rules state that 





> When a member's contributions to an exempt approved scheme are refunded in his lifetime or where his withdrawal benefit is a policy surrender value appropriate to his contributions, the administrator becomes liable to tax on the gross refund under Case IV of Schedule D at the *standard* rate of tax in force at the time of payment. The tax is chargeable on the amount paid (inclusive of any interest element) or, if the rules permit the administrator to deduct this tax before payment, on the amount before such deduction.
> The refund may be transferred to a PRSA without a tax charge.


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## michellet5 (21 Aug 2008)

Question:

If you are in the pension for more than 2 years, can u still reclaim your money or does it have to be re-invested??


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## LDFerguson (21 Aug 2008)

michellet5 said:


> Question:
> 
> If you are in the pension for more than 2 years, can u still reclaim your money or does it have to be re-invested??


 
If you are in an Occupational Pension Scheme and leave the company with more than two years pensionable service, you cannot get an immediate refund of the value of your contributions.  You can leave the fund in the existing scheme until retirement, transfer it to your new employer's scheme or to a Buy Out Bond of your own choosing.

But you'll get the benefit of the employer contributions once you reach the magic two years pensionable service.


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## michellet5 (21 Aug 2008)

LDFERGUSON

Many thanks for your reply.... Its a lot clearer now cheers


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