Advice on Leaving Service Options Executive Pension

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Cologneboy8

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Good evening,

I've been living and working in Ireland from 2001 to 2017, I went back to my hometown Cologne then. For a couple of years I had worked as a director of a private company in Ireland for which I had an executive pension through New Ireland. When left I didn't bother to do anything, I now got around to consider my options. I've received my leaving service options and I am looking for some advise what might be the best option to chose. I am 55 years old now, I like working and will continue doing so until 67, hoping my health remains good. I do not require any cash now but want conrol over my pension, potentially maximise performance and minimise costs. Happy to use it then as part of my overall pension when I do retire. THe current value is close to €100.000,-, the listed options are:
  1. A paid-up- pension subject to revenue rules payable from my retirement date
  2. Transfer value to a Personal Retirement Bond
  3. Transfer to a Personal Retirement Savings Account
  4. The current paid-up value of te policy could be used to provide an immediate retirement benefit -Not Interested
I left out the options listed that are not applicable to my situation, transfer to my new employer and scheme to remain with my old employer.

Any experience and/or advise out there? Thanks!

Cologneboy8
 
You're still living in Cologne, right?

I suspect what you have received from the New Ireland is a form letter that they supply to all holders of your product which takes no account of your particular circumstances. In particular, if you are non-resident in Ireland you will find it difficult to take out eithre a personal retirement bond or a PRSA — the providers of these products are reluctant to sell them to people who reside in a country in which they, the providers, are not licensed or authorised.

The New Ireland's position will always be that they are happy to transfer your fund to a PRB or a PRSA — if you can get one, but that's not their problem. You may need to research what options are in practice open to you as a non-resident of Ireland. And one of the options that may be open to you but that isn't listed in the New Ireland's letter would be a transfer to a retirement savings arrangement established in Germany (or elswhere in the EU).
 
TomEdison said:
You're still living in Cologne, right?

I suspect what you have received from the New Ireland is a form letter that they supply to all holders of your product which takes no account of your particular circumstances. In particular, if you are non-resident in Ireland you will find it difficult to take out eithre a personal retirement bond or a PRSA — the providers of these products are reluctant to sell them to people who reside in a country in which they, the providers, are not licensed or authorised.

The New Ireland's position will always be that they are happy to transfer your fund to a PRB or a PRSA — if you can get one, but that's not their problem. You may need to research what options are in practice open to you as a non-resident of Ireland. And one of the options that may be open to you but that isn't listed in the New Ireland's letter would be a transfer to a retirement savings arrangement established in Germany (or elswhere in the EU).
Click to expand...
Hi TomEdison, correct, I am still in Cologne. A PRB would probably, as much as I unerstand it right now, be a good option for me. Do you know if I would be able to take a lump sum of up to 25% of the value of the pension right now, tax free, and move the rest to a PRB, should I be able to get one. This would give me full control of the 25%. Thanks.
 
No, I don't think so.

Different rules apply, depending on whether you are:
  • transferring your retirement savings between different retirement savings products at some time before taking retirement benefits, or
  • taking retirement benefits and, in that context transferring all or part of your fund into a product which pays out benefits.
At any time before taking retirement benefits, you can transfer the whole of your current fund to a PRB or a PRSA (if anyone will issue one to you).

Or, when you want to start taking benefits, you can take 25% of your fund as a tax-free* lump sum and use the remaining 75% either to purchase an annuity (regular monthly payments, guaranteed to continue for your life) or to purchase an Approved Retirement Fund (high degree of flexibility as to when and and in what instalments you draw out the fund value, but no guarantee that the payments will continue for life — when the fund is gone, it's gone). Again, as a non-resident you may have difficulty finding a provider willing to issue either an annuity or an ARF for you.

(Of course, you can do one and then the other — e.g. transfer to a PRB today, and then tomorrow start taking benefits from the PRB, taking out your 25% lump sum and putting the rest into an annuuity or an ARF.)

Was there a broker or adviser involved in setting up or administering the executive pension plan? I'd look to them for assistance in finding out what options are, in practice, available to you as a non-resident when it comes to getting your money out.

* The 25% lump sum is tax-free in Ireland, but of course you're tax-resident in Germany. Under the Ireland/Germany Double Taxation Agreement a pension from an Irish employment payable to a resident in Germany is taxable in Germany, and vice versa. Tax reliefs and tax exemptions granted by Irish legislation are only reliefs and exemptions from Irish tax, so do not assume that your "tax-free lump sum" is tax-free in Germany. Before you make any decisions about lump sums (or indeed any other benefits you might take from your Irish retirement savings) you should first of all research what German tax liabilities they might attract.
 
TomEdison said:
No, I don't think so.

Different rules apply, depending on whether you are:
  • transferring your retirement savings between different retirement savings products at some time before taking retirement benefits, or
  • taking retirement benefits and, in that context transferring all or part of your fund into a product which pays out benefits.
At any time before taking retirement benefits, you can transfer the whole of your current fund to a PRB or a PRSA (if anyone will issue one to you).

Or, when you want to start taking benefits, you can take 25% of your fund as a tax-free* lump sum and use the remaining 75% either to purchase an annuity (regular monthly payments, guaranteed to continue for your life) or to purchase an Approved Retirement Fund (high degree of flexibility as to when and and in what instalments you draw out the fund value, but no guarantee that the payments will continue for life — when the fund is gone, it's gone). Again, as a non-resident you may have difficulty finding a provider willing to issue either an annuity or an ARF for you.

(Of course, you can do one and then the other — e.g. transfer to a PRB today, and then tomorrow start taking benefits from the PRB, taking out your 25% lump sum and putting the rest into an annuuity or an ARF.)

Was there a broker or adviser involved in setting up or administering the executive pension plan? I'd look to them for assistance in finding out what options are, in practice, available to you as a non-resident when it comes to getting your money out.

* The 25% lump sum is tax-free in Ireland, but of course you're tax-resident in Germany. Under the Ireland/Germany Double Taxation Agreement a pension from an Irish employment payable to a resident in Germany is taxable in Germany, and vice versa. Tax reliefs and tax exemptions granted by Irish legislation are only reliefs and exemptions from Irish tax, so do not assume that your "tax-free lump sum" is tax-free in Germany. Before you make any decisions about lump sums (or indeed any other benefits you might take from your Irish retirement savings) you should first of all research what German tax liabilities they might attract.
Click to expand...
Thanks again. I am aware that the tax treatment needs to be considered between Ireland and Germany.
 
The tax treatment also varies depending on whether you chose an annuity or an ARF (assuming you can find an Irish provider who will sell you one). If you chose an annuity and are resident in Germany, then you don't have to pay any Irish tax on it. However, if you choose an ARF, then you do have to pay Irish tax on it and may also have to pay German tax on it.

I would imagine that the best option would be to transfer it to an equivalent German fund. But there seems to be very little information out there on equivalent funds for other EU countries. Considering the amount of EU nationals currently working in Ireland, this will surely become an issue over time.
 
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