# Advice - leaving company pension scheme < 2years



## CS1 (27 Jul 2007)

I am just looking for some advice and cannot find any threads relating to my particular query.

I am leaving my current employer having been with the company pension scheme for about 17 months.  My new employer will not be offering a company pension scheme until January at the earliest.  I am considering setting up a PRSA in the meantime and then hopefully transferring it to my new employer's pension scheme whenever that is set up.  My questions are:

1. Is this a recommended route or should I just wait until my new employer's scheme is set up and not worry about the PRSA?
2. Should I leave what is in my current scheme where it is or cash it in and put in the PRSA/new company scheme? (it is only worth about €1500 and I am guessing it will dcrease significantly once my employer's contributions are deducted)
3. Should I set up the PRSA anyway and keep it up along with the new employer's scheme as an added pension fund upon retirement?

I am 31 years old and only started my first pension last year as I worked abroad before that.  Any recommendations or advice is appreciated.

Thank you.


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## ClubMan (27 Jul 2007)

CS1 said:


> 1. Is this a recommended route or should I just wait until my new employer's scheme is set up and not worry about the PRSA?


Depends - if you feel that you should be saving on an ongoing basis for retirement then it makes sense to have a pension available at all times to which you can contribute.


> 2. Should I leave what is in my current scheme where it is or cash it in and put in the PRSA/new company scheme? (it is only worth about €1500 and I am guessing it will dcrease significantly once my employer's contributions are deducted)


Again - impossible to say for sure without more knowledge of your overall situation. You can

Take a refund of personal contributions after tax
Leave the money where it is
Transfer to another occupational scheme now or later
Transfer to a buy out bond/pension retirement bond
Transfer to a _PRSA _if the sum involved is under €12K or thereabouts
What is most appropriate depends on your specific circumstances, the costs/benefits of each option etc.


> 3. Should I set up the PRSA anyway and keep it up along with the new employer's scheme as an added pension fund upon retirement?


See the first point.


> I am 31 years old and only started my first pension last year as I worked abroad before that.  Any recommendations or advice is appreciated.


I would urge you to get independent advice from a good authorised advisor or multi-agency intermdiary who can do a proper fact find/financial review and recommend options suitable to your specific circumstances.


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## CS1 (27 Jul 2007)

Thanks for your input Clubman.  I think I will proceed with getting independent financial advice - the whole area of pensions is way more complicated than I orginally thought!


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## oysterman (27 Jul 2007)

CS1 said:


> I think I will proceed with getting independent financial advice - the whole area of pensions is way more complicated than I orginally thought!


Don't get too much advice on the €1500 fund or the fees will be greater than the value of the fund.


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## Homer (28 Jul 2007)

oysterman said:


> Don't get too much advice on the €1500 fund or the fees will be greater than the value of the fund.


 
My thought exactly. 

If you are not planning to pay the maximum allowable pension contribution over the next year, you may be better off just taking a refund of your contributions less 20% tax.

You could then invest the grossed up equivalent of your net refund (i.e. allowing for income tax and PRSI relief) in a PRSA or your new employer's pension scheme.

Regards
Homer


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## boaber (29 Jul 2007)

Homer said:


> You could then invest the grossed up equivalent of your net refund (i.e. allowing for income tax and PRSI relief) in a PRSA or your new employer's pension scheme.



If a person elects to take a refund of contributions from a scheme and then transfer these into a PRSA, then there is no deduction of the 20% tax that would normally be due.  There is also no further relief (tax of prsi) on this transfer


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## ClubMan (29 Jul 2007)

I agree with the comments about the probably inadvisability of getting professional advice for the €1.5K pension alone. However it may still be worth getting a full financial review/health check from a professional if you want to to review/plan your overall pension strategy and maybe your general savings/investments situation.


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## Homer (30 Jul 2007)

boaber said:


> If a person elects to take a refund of contributions from a scheme and then transfer these into a PRSA, then there is no deduction of the 20% tax that would normally be due. There is also no further relief (tax of prsi) on this transfer


 
Yes, that's true. You can transfer the refund directly into a PRSA and avoid the 20% tax.

On the other hand, you also have the option of paying the 20% tax and then using the net refund to pay into a PRSA or company pension plan. You can then claim tax and PRSI relief on the 'grossed up' equivalent of the net refund. Allowing for current tax and PRSI rates, this is likely to be somewhere between 26% and 43%, which is better than the 20% tax you would save by transferring the money directly.

As I stated in my posting, this makes sense if you are not planning to maximise your contributions for the year. If you *are* planning to maximise them anyway, then you could go back to transferring the gross refund in addition to your contributions.

Homer


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## CS1 (1 Aug 2007)

Thanks for all the advice - it's been very useful.  I have applied for some info packs on several PRSA scemes and will use these and the advice given here before proceeding further.  Thanks.


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