# Advice needed on how to extract pension value?



## ivorystraws (18 Feb 2011)

Hello,

I have 2 pensions (one with a former employer and my current one). Both of them have an approximate current value of just under 40,000 euro. I would like to know the options available to me which would enable me to extract the money from one or preferably both those pensions? I am in my early 30's so I know my options are extremely limited but I just want to know if I can get any value from the pension(s) at all? Even if I could sell them, transfer them, redirect them to some other investment vehicle (in new business?) in order to extract the value? 

Appreciate all help and/or ides?

Thanks,
Alan.


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## jpd (18 Feb 2011)

Not possible - you have to wait until you reach the retirement age - this will be stipulated in the rules governing the two schemes.


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## ivorystraws (18 Feb 2011)

jpd said:


> Not possible - you have to wait until you reach the retirement age - this will be stipulated in the rules governing the two schemes.



Are you saying that there are no options available whatsoever?

Obviously I know it's possible to transfer the benefit from previous employment to my new employers scheme (but I'll have to debate charges etc).


My pension from my previous employment was only in for 19 months so shouldn't it be possible to cash this in?
Employees/Company Directors can avail of a pension mortgage so would that open up my options as I do have my own company i.e. Couldn't I get a pension backed loan (where tax relief is absolutely maximised)?
What about transferring from my occupational pension scheme to a PRSA scheme under a different name (i.e. to my Fathers name as he is due to retire in 3 years)?
I can use the pension as part of a property investment but this would tie up the capital until the asset is sold (although I could get rental from it).

I definitely know there are options available but I'm looking for those options along with advice.


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## PaddyBloggit (19 Feb 2011)

No options available.

I have an AVC fund ... losing money. I can't do much other that watch it diminish in size until I retire.

'Tis locked in until then.


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## JoeRoberts (22 Feb 2011)

"My pension from my previous employment was only in for 19 months so shouldn't it be possible to cash this in?"

Was this a DB or DC scheme ?
Generally you can cash in the current value of your contributions if you were a member for < 2 yrs if a DC scheme. May also be entitled to value of employers contributions if the scheme rules allows it. 
Must pay tax at standard rate though.

Can also withdraw from a DB scheme if < 2 yrs but different calc.
Your leaving statement from either scheme should detail what your entitlements are. Ask for an updated statement. It is less starightforward if it is advisable to withdraw from a DB but post back with which type of scheme you were in first.


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## ivorystraws (22 Feb 2011)

JoeRoberts said:


> "My pension from my previous employment was only in for 19 months so shouldn't it be possible to cash this in?"
> 
> Was this a DB or DC scheme ?
> Generally you can cash in the current value of your contributions if you were a member for < 2 yrs if a DC scheme. May also be entitled to value of employers contributions if the scheme rules allows it.
> ...



Finally! Thank you Joe for actually providing a helpful response. The previous responses are very dismissive (although probably technically correct in a limited way), unhelpful and not completely correct as I know for a fact that there are methods for extracting pension value and you've possibly confirmed one of them.

The company scheme I was in was a scheme where I contributed a certain percentage and my employer matched that. When you mention that it's possible to cash in the current value of my contributions if I was a member for < 2 yrs (of a DC scheme), what constitutes being a member? The reason I ask is that I was a contributing member but then had an accident so obviously no longer contributed after that so just wondering how I stand in that respect? Yes, I am aware that I must pay tax at standard rate.

I definitely want to withdraw from the scheme but am I eligible? 

I will ask for an updated statement. 

Again, thanks for your help plus any advice you can give on the other points I mentioned in a previous post would also be helpful. Appreciate the information.


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## Conan (22 Feb 2011)

As a general rule, if you leave service having completed less than two years membership of the scheme, you can seek a refund of your personal contributions (less tax at 20%). So if you got 41% relief going in, you made a "profit" on the deal. BUT you cannot get a refund of the Company contribution. This goes back to the Company (as a trading receipt). If the Company decided to "give "you their contribution then such is taxable as income (this is not the usual practice).
 If you contributed for less than two years, then had an accident(presumably stopped contributing only on the basis that you ceased to be an employee earning a salary) you may be able to get a refund. Ask your scheme Trustees or Scheme administrator.


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## TheFatMan (23 Feb 2011)

*<2 Years!*

Hi Folks

Its not that you contributed for less than 2 years! Its that you must be a member of the scheme for less than 2 years.

Ok he contributed for 19 months but he has been a memeber (active and deffered) for more than 24 months therefore the fund is locked to him until his earliest retirement date.

If he is less than 24 months a member of his current pension scheme then he can encash that, pay a flat 20% tax on the Employe/AVC contribution and forfeit the employer contribution portion. But he must leave the pension scheme as a member too. If he is more than 24 months a member then afraid thats locked away too until the earliest retirement date of the scheme.

He can transfer to a PRSA or retirement bond but he cannot transfer it to another person (in this case his father) he must be the sole beneficiary of anything he moves the 2 older pensions to.

Not sure about the pension mortgage question as I've never seen it done but my sense is its not a runner for a standard member of a DC/DB fund.

So PaddyBloggit is short and sweet but mostly correct.


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## elacsaplau (23 Feb 2011)

I don't think TheFatMan is correct when he says....._Its not that you contributed for less than 2 years! Its that you must be a member of the scheme for less than 2 years._

The general position is that refunds of personal contributions are permitted where you have less than 2 years' qualifying service. Qualifying service means service in the occupational pension plan as a member of the pension plan plus, if relevant, service in a previous plan from which a transfer payment was received into the current plan.


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## huskerdu (25 Feb 2011)

elacsaplau said:


> I don't think TheFatMan is correct when he says....._Its not that you contributed for less than 2 years! Its that you must be a member of the scheme for less than 2 years._
> 
> The general position is that refunds of personal contributions are permitted where you have less than 2 years' qualifying service. Qualifying service means service in the occupational pension plan as a member of the pension plan plus, if relevant, service in a previous plan from which a transfer payment was received into the current plan.



The question is whether it is too late for the OP to do this now, as he didn't do it when he left the company.


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## ivorystraws (26 Feb 2011)

Hi All,

Thanks for all the responses and snippets of information although a lot of the information is conflicting!?

huskerdu is correct when they mention that I was a contributing member of the Corporate Pension for 19 months and I did not actively participate thereafter nor did I make any further contributions. However, I am still technically employed by my employer as the law states that my employer cannot terminate my employment whilst I am out of work as a result of long term illness.

So what I want to know now is: 

1: Whether I can cash in my pension from my previous employment as I was not actively contributing to it for the required 2 years qualifying service!?

2: Is there anyone who can provide more detailed information on how Company Directors can avail of a pension mortgage which would obviously provide me with further options i.e. Couldn't I get a pension backed loan (where tax relief is absolutely maximised)?

3: What about the Small Self Administered Pension Scheme?
- It could reduce both my corporate and personal tax
- It could help extract funds from a company without any income tax liability

4: What about using a French Leaseback Property which are available as a pension option for Irish pension holders which would provide a guaranteed rental income and a VAT rebate of 19.6%?

I am looking forward to helpful factual informative advice and options, not responses like the first 2 posters. 		

Thanks and I also appreciate all the PM's on this topic!


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## TheFatMan (6 May 2011)

I Stand corrected here. It is 2 years of active contributions not 2 years of total membership.


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