DC Pension. I have a few separate schemes & PRSA, what the best thing to do with them?

H

Hayman

Registered User
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Hi,

DC Pension. I have a few separate schemes & PRSA, what the best thing to do with them? Consolidate them, leave them alone or something else?
 
Hi Hayman, you could just leave them there and look to mature them at 50 depending on how they are performing. Do you keep track of them at all? If they were making good returns I'd be inclined to leave them be but if you want to take control of them you could look to transfer the pension scheme funds to a Buy Out Bond (the consolidation you mentioned above) with a life company over which you would have more investment control. However, you would be less diversified this way.

Are you currently part of an employer pension scheme? If you are the rules may allow you to transfer the older pensions and the PRSA to this scheme. Again, this would be putting all your eggs in one basket.

Gerard
www.proactivefinance.ie
 
Retained pension benefits or benefits in a buy out bond is paid out tax free if you died. If you transfer them into an existing employer scheme, the maximum tax free lump sum is 4 times salary with the remainder being used to purchase an annuity.

Another aspect is charges. A lot of employers pay some/ all of the charges. If you transfer the funds to your own name, you pay the charges.

From an admin point of view, how easy is it to keep track of your benefits. If you they are with a big company, it can be pretty easy to get in contact with the company. If it's a smaller company, they could close or merge and you may lose track of them. Remember, when the policy is part of the group scheme, it's under trust and you need a trustee signature to do anything such as switching funds or maturing the plan.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Hi Gerard,

yes I can track them as in I have portal access to see how they are doing and to change underlying funds however the waters get pretty muddy at that point as I don't know what to swap into and out of so I have just left them.

Yes I am part of a DC scheme with my current employer, noted re putting all my eggs in one basket.


Hi Steven,

thanks for your points also, good to know.



Can I ask you both when it comes to pension time what happens, is it you draw a tax free lump sum from your DC pot tax free which is X times your final salary then purchase an annuity with the rest?

And if my DC pots are spread across different schemes how is this factored in are they lumped together?

Is there a married and single band for the tax free element - does the spouses income come into it?

Thank you
 
Hi Hayman,

You can either take lump sum as up to 1.5 times your salary and purchase an annuity with the balance or else take 25% lump sum and use the balance to purchase an annuity or invest in an ARF and/or AMRF or you may able to take it as taxable cash depending on your circumstances.

They would not be lumped in together but you could transfer after lump sum money into the one product eg. ARF.

Spouses income would have no impact on the tax free portion of the lump sum (which may be all of it). The maximum in tax free lump sums you can take combining all policies is €200,000, however the next €300,000 could be taken subject only to standard rate income tax.

Gerard
www.proactivefinance.ie
 
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