Advice on DB scheme closing

D

DeeKie

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A DB scheme that I was in during my first real job is closing down. The law firm is merged with another. The trustees wrote to me today to say either transfer my portion or they will buy a prsa with it.

Out of curiosity can they do that? I’ve got another old DB scheme I’m in. I presume I cannot transfer into that but only into my current employer DC scheme?

Thanks
 
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Yes they are entitled to close down DB scheme - many schemes have closed as employers find it too expensive to maintain the DB entitlements.
 
Once the money is transferred out, all guarantees are gone. Technically, you can transfer the value of the closing DB scheme to the other DB scheme but the guarantees will not transfer. Better to either transfer into your current employer, or keep it separate so that you have the flexibility of maturing it earlier if you want. Also, in the case of death before retirement, the full value of the PRSA will be paid to your estate as a tax free lump sum. If you transfer it to your current scheme, the total pay out is limited to 4 times salary plus value of personal contributions. The remainder must used to purchase an annuity.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
SBarrett said:
Once the money is transferred out, all guarantees are gone. Technically, you can transfer the value of the closing DB scheme to the other DB scheme but the guarantees will not transfer. Better to either transfer into your current employer, or keep it separate so that you have the flexibility of maturing it earlier if you want. Also, in the case of death before retirement, the full value of the PRSA will be paid to your estate as a tax free lump sum. If you transfer it to your current scheme, the total pay out is limited to 4 times salary plus value of personal contributions. The remainder must used to purchase an annuity.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Click to expand...
Thanks so much Steven. So I’d be better to passively let them buy the prsa? Or would it be better to buy my own prsa? I say that as if I know how to do that!
 
It depends on how much control you want. If they decide what PRSA it goes into, they also decide on the charging structure (although there are limited choices under legislation) and the investment funds.



Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
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