Putting old PRSA and PRB into current DC work scheme.

W

world201812

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Hi all,

Have a company DC scheme.

Also, have PRB and PRSA from a previous life.

Thinking of throwing the PRB and PRSA into the work scheme/DC.

Any disadvantages to this? I am told there are no charges or penalties for doing so.

Any downsides/risks? Thanks.

Reason I'm considering it is I am sick of looking at different statements coming in.
 
There's no definitive answer that this is a good thing or a bad thing to do. But here's some things to think about before doing it.

  • Compare the charges on the DC scheme with those on your PRB and PRSA.
  • You need to check if there are charges at either end - will the DC scheme charge you for transferring or will the PRB charge you for leaving - possible early exit penalties etc.?
  • Do the fund choices on the DC scheme suit you?
  • Concentration risk - you will be entrusting your entire pension pot to one provider. This provider might do well; it might not. They might do better than the current PRB or PRSA; they might not.
  • Service in the scheme that accumulated the PRB will be added to service in the DC scheme if you transfer in. This can have a few technical implications, e.g. if you leave the DC scheme after less than two years.
  • In my mind the biggest reason to leave things alone is that it can be useful to have a few different pension pots when you retire, as it allows you to draw on them at different times. Increasingly I'm seeing people who don't just retire one day and never work again. People are cutting down their hours, going part-time for a while, doing consultancy work etc. Easing into retirement. Having a few different pension pots can give you the flexibility to draw on one when you want to supplement your income on going part-time etc.
  • You can draw the benefits from the PRB from age 50 if you want. If the PRSA was funded from PAYE employment and you've left that employment and have nothing to do with that company, you can draw on that from age 50 onwards also, regardless of whether or not you're still working and/or in the current DC scheme. You'll lose that flexibility if you roll them all into the DC scheme.

This is not an exhaustive list, nor is it advice to go one way or another. But if you go through this list and are happy that none of it changes your mind, then go for it.

Regards,

Liam
https://ferga.com/
 
Thanks so much for that Liam, and thanks RedOnion.

All three are with Irish Life in one form or another.

I know little about the choices, but they seem standard/as good as anything out there.

Charges wise, the DC scheme is far more beneficial than the PRB and the PRSA.

That I am certain of. But I will check out the charges in terms of transferring out from PRB and PRSA.

Am aware of the two years caveat, as in if I leave my current employer inside two years of joining the scheme, 2.5 years into the role, I can’t transfer it and have to wait until I am 50 to access the work/DC scheme if I depart inside timeframe. This sound right?

In terms of the reason to leave well alone, and the easing into retirement, it is something I haven’t considered.

Just on your last point Liam, if I leave my current employer say five years from now, I can transfer into a new scheme or leave it sit and draw it down at 50 irrespective as to whether or not I am working at that time? I expect we all will be!!
 
world201812 said:
Am aware of the two years caveat, as in if I leave my current employer inside two years of joining the scheme, 2.5 years into the role, I can’t transfer it and have to wait until I am 50 to access the work/DC scheme if I depart inside timeframe. This sound right?
Click to expand...
What the 2 year rule generally means is if you leave within 2 years of joining the scheme, you lose the Employers contributions. Forever.

Which is a good reason to transfer in if your employer scheme allows, as you've got your 2 years straight away.
 
, thanks!

You might clarify this for me as I’m slightly confused now with the ‘sa you've got your 2 years straight away’ line. Thanks.

My understanding is as follows.

6 months after I joined company, I was eligible to join DC scheme, or which I am a member.

However, if you leave within 2 years of joining the scheme, or 2.5 years into employment, I lose the ability to transfer my and the company contributions to another scheme, but have the option to leave my and the employer contributions sit until I am 50, and then draw them down? This is correct, no?

Are you saying if I put in the PRB and/or the PRSA contributions now, inside the two years of being a scheme member at work, I won’t lose anything if I chose to leave inside two years? And simply roll it all (DC contribs from employer, my contribs, PRSA, PRB) into new scheme or leave them all sit until I am 50?
 
The two year rule mostly relates to whether or not you get to keep your employer's contributions. If you leave an employer within two years of joining the pension scheme, the employer has the right to take back the value of the employer's contributions to your pension fund. (When setting up the scheme, the employer can choose to waive that right and give all employees "immediate vested rights" i.e. you get to keep the value of the employer's contributions straight away.) A related option is the refund of contributions option if you leave within two years. You can choose to take a refund of the value of your contributions, less 20% tax and if you avail of that option the employer gets a refund of the value of theirs.

If you had two years or more in the previous ("PRB") pension scheme and you transfer that into your current DC scheme, then you've got more than two years' service altogether and regardless of when you leave the DC scheme, you'll get to keep the value of the employer contributions and the refund option won't be available.

world201812 said:
Just on your last point Liam, if I leave my current employer say five years from now, I can transfer into a new scheme or leave it sit and draw it down at 50 irrespective as to whether or not I am working at that time? I expect we all will be!!
Click to expand...

Yes that's correct - as well as "leave it sit" you could transfer it into another PRB if you wanted. Takes the scheme trustees out of any future decisions regarding the fund. But if the fund choice and charges are good in the DC scheme, you can leave it sit.

And to be clear - age 50 is "from" age 50, so it could be 55 or 59 etc. Good luck if you can retire at 50. I fully expect to have my nurse wheel my doddery old frame into work a lot older than that. :p
 
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