Key Post At what age can I draw on my pension?

LDFerguson

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4,053
This is a query that arises frequently and the answer is different depending on the type of pension arrangement.

  • If you have a Personal Pension (a.k.a. Retirement Annuity Contract or RAC) the earliest you can retire is age 60.
  • If you have a PRSA and are self-employed the earliest you can retire is age 60.
  • If you have a PRSA and are in PAYE employment you can retire from age 50 as long as you are also retiring from the employment. After age 60 you don't have to be retiring from the employment to draw benefits from a PRSA.
  • If you are a member of an Occupational Pension Scheme, you can retire from age 50 onwards with the approval of the scheme trustees. The trustees don't have to give this approval. For example, if you are in a Defined Benefit pension scheme, early retirements may be prohibited because they can affect the financial position of the scheme as a whole. If you are retiring from an Occupational Pension Scheme before the scheme's Normal Retirement Age then you must also retire from the employment and if you are a shareholding director, dispose of your shares.
  • If you have Additional Voluntary Contributions (AVCs) or an AVC PRSA, then you must access these at the same time as retiring from the main Occupational Pension Scheme.

Exceptions
  • If you are retiring due to ill-health then you can retire at any age, regardless of what type of pension arrangement you have. There is a fairly strict Revenue definition of what qualifies for an ill-health early retirement but in broad terms it means that you are so ill that you are reasonably unlikely to be able to work again. Medical evidence will usually be requested to verify this. (If you do take ill-health early retirement and are fortunate enough that you subsequently recover, that's no problem - you can get a job again if you want/can.)
  • Until March 2016 there is a temporary scheme whereby you can withdraw up to 30% of any AVCs you have as a once-off lump sum regardless of your age. Any such withdrawal will be subject to your highest rate of income tax. It only applies to funds accumulated through Additional Voluntary Contributions (AVCs). If your fund is not an AVC or a PRSA AVC then this scheme doesn't apply to you. This scheme was discussed on AAM here and you can read the Pensions Board FAQ on it here.
Liam D. Ferguson
 

RainyDay

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4,506
Liam, can you clarify what exactly is meant by 'retiring from employment'. If a member of an occupational pension scheme takes early retirement at 50 with the permission of the scheme trustees, is there anything to stop him taking up another job in the same profession/trade at 51?
 

LDFerguson

Frequent Poster
Messages
4,053
Liam, can you clarify what exactly is meant by 'retiring from employment'. If a member of an occupational pension scheme takes early retirement at 50 with the permission of the scheme trustees, is there anything to stop him taking up another job in the same profession/trade at 51?
Hi RainyDay,

If you're taking early retirement from an Occupational Pension Scheme, you have to resign from the employment that the pension scheme relates to. So if you're an employee of Acme Widget Company and a member of the Acme Widget Company Occupational Pension Scheme and want to draw your benefits from this pension scheme at 50, you must also retire from Acme Widget Company. No problem at all if you take up alternative employment the very next day in the same or any other industry.

In an alternative scenario, let's say you were previously an employee of Acme Widget Company but left years ago to work for Wally's Widgets. You have a fund in the Acme pension scheme. You hit 50. With the agreement of the Acme pension scheme trustees you can draw your benefits from the Acme pension scheme even though you continue to be an employee of Wally's Widgets. No problem there as you're not an employee of Acme.
 
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