# How to encash a Irish Life - Complete Solutions Personal Bond



## MrEarl (18 Mar 2013)

Hello,

A close friend has an Irish Life Complete Solutions Personal Bond, has recently turned 60-years and has now elected to retire.

My friend needs to access money quickly (for personal reasons) and is anxious to know what his rights are, in respect of accessing funds from the above (it's a small fund with less than €40k in value).

Is it simply a case of phoning Irish Life and advising them that he wants to encash the product, then they do the rest ? 

- if so, is 25% of the fund the maximum amount he can withdraw (tax free or otherwise) ?

He has no other savings but does own his personal home outright & could elect to rent a room for example, to earn a small income.  Nonetheless, he wants to withdraw the entire fund, if thats an option.

Sorry I appreciate these are very basic questions, but I've limited pension experience (and what knowledge I have, is with regards to Company Schemes) and regretfully, he does not have a Financial Advisor - with the previous one who helped arrange this bond, no longer contactable.

Many thanks

Mr. Earl.


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## LDFerguson (20 Mar 2013)

There is an alternative method of calculating his lump sum, based on his salary in the job before he left and his number of years' service. If he can access both of those figures & contacts Irish Life with them, Irish Life should be able to calculate his maximum tax-free lump sum. It may be more or less than 25%. 

If the balance of the fund after taking the tax-free lump sum is €20,000 or less then he can withdraw it as a lump sum also. This lump sum would be assessable for tax and the USC.


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## MrEarl (21 Mar 2013)

Hello Mr. Ferguson,

Thank you very much for this assistance.

I will ask him if he has documentation to support this requirement ... in truth, he has not worked regularly for a few years and in more recent years, he was self employed rather than an employee (so I expect a tax return might serve the same purpose, to confirm his earnings).

Again, my thanks.

Regards

Mr. Earl.


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## LDFerguson (21 Mar 2013)

It is possible that Irish Life may already have this information - normally they would request it when the Personal Retirement Bond was being set up.  If he can't lay his hands on it easily, it might be worth checking this with Irish Life also.  

Regards, 

Liam


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## MrEarl (22 Mar 2013)

Hello Liam,

Thank you once again for your kind assistance.  Having spoken with the person further, it now seems they also have a second small pension fund - so the total funds from the two pensions will be approx €65k (after deducting the 25% tax free lump sum) & hence, I do not believe that they can now withdraw all funds, regardless of tax liability - is that correct ?

Regretfully, he does not meet the criteria to show €119.8k invested in an AMRF or guaranteed income of €18k pa (unless the state non contributory pension and a rent a room combination might qualify ?  .. other than that, all he has is his family home, which is thankfully debt free).

Given there are two small funds, he has reached retirement etc it seems  the best he can aim for now, is an immediate withdrawl of 25% tax free  lump sum and thereafter, regular pension payments.  As such, I expect  both funds need to be merged into a suitable product (an annuity, to permit for small but regular income each year ?).

Thank you once again.


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## LDFerguson (23 Mar 2013)

MrEarl said:


> Hello Liam,
> 
> Thank you once again for your kind assistance. Having spoken with the person further, it now seems they also have a second small pension fund - so the total funds from the two pensions will be approx €65k (after deducting the 25% tax free lump sum) & hence, I do not believe that they can now withdraw all funds, regardless of tax liability - is that correct ?


 
Yes it is.  The trivial pension rule applies to all pension funds of an individual.  



MrEarl said:


> Regretfully, he does not meet the criteria to show €119.8k invested in an AMRF or guaranteed income of €18k pa (unless the state non contributory pension and a rent a room combination might qualify ? .. other than that, all he has is his family home, which is thankfully debt free).


 
Finance Bill 2013 reduced these limits to €63,500 and €12,700 for a three year period commencing from when the Finance Act 2013 is passed (expected to be next month). The State pension does qualify in these calculations, but only the amount attributable to the man himself - not any increase he might be eligible for a dependent.  Rental income does not.  However, as he has only turned 60, presumably he doesn't become eligible for the State pension for another few years, by which time the ARF limits will have gone back up to €18,000 per year!



MrEarl said:


> Given there are two small funds, he has reached retirement etc it seems the best he can aim for now, is an immediate withdrawl of 25% tax free lump sum and thereafter, regular pension payments. As such, I expect both funds need to be merged into a suitable product (an annuity, to permit for small but regular income each year ?).


 

It is worth his while checking to see if the calculation of the maximum lump sum based on his salary and service works out at more than 25%.
If he needs/wants income from the balance of the fund now, then his only option is an annuity (fixed pension for life).  He should shop around for the best rate he can find on the annuity, as annuity rates can vary between providers - he's not restricted to buying the annuity from the same company that currently holds the pension fund - and also depending on what channel he purchases the annuity through.  Even a small increase in the pension is worth shopping around for, given that he will be receiving it for the rest of his life.
If he doesn't need the additional income now, but does need the lump sum, he can defer taking the pension now, by re-investing the balance of the fund into an Approved Minimum Retirement Fund (AMRF).  He does not have to take any income from an AMRF until he is 75 but he can choose to convert it into an annuity at any time, e.g. when he is also drawing the State Pension.


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## MrEarl (23 Mar 2013)

Thanks Liam,

I went to send you a private message but see your not permitted / or set up, to receive message on this website.

Not to worry, I've seen your website and will telephone you early next week as I think we are going to need your assistance further.

Again, my thanks

Mr. Earl.


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## LDFerguson (23 Mar 2013)

Feel free to send me an e-mal to liam@ferga.com


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