# Pension lump sum - early retitment-



## chasie (16 Feb 2010)

Hi All
I understand on completion of 20 years a person is entitled to tax free lump sum of 1.5 times final remuneration at normal retirment (65)

What is the calculation reducing this sum if a person retires early(58) still fulfilling the 20 year minimum service-- total service is 33 years


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## boaber (19 Feb 2010)

The maximum immediate benefit is the greater of -

(a) 3/80ths of final remuneration for each year of actual service

(so 99/80ths in your case)

or
(b) (N/NS) x LS

N = number of actual years of service
NS = number of years of potential service to NRA
LS = the maximum lump sum receivable had you served until NRA (120/80ths)

So, assume a salary of €50K:

a) €50K x 99/80 = €61,875

b) (33/40) x 1.5 x €50K = €61,875


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## chasie (20 Feb 2010)

Excellent
Thank you boabar


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## Marianne (22 Feb 2010)

What happens if the person leaves the company first?

In the example above, what happens if the person leaves the company at age 55 after 30 years service, but doesn't take retirement benefits until age 58 per the example?  Say €50,000 salary when leaving the company as before.  

Thanks.


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## boaber (22 Feb 2010)

a) (3 x 30)/80 x €50K = €56,250

b) (assuming a Normal Retirement Age (NRA) of 65)

(30/40) x 1.5 x €50K = €56,250

Calcs are based on Actual Service Vs Potential Service (staying in service to NRA), so the 3 years between leaving the company & taking benefits are not included in the calc.

You could though increase the final salary figure in line with CPI over that 3 year period


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## whackin (22 Feb 2010)

A retitment sounds sore


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## mtk (22 Apr 2010)

related question if you have a deferred pension and two defined  contribution schms from previous employements do you get the tax free cash proportionally from each scheme or from one that you early retire from ?


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