Leaving service options PRSA scheme, best choice

[SClarke]

I recently got redundancy and have received my leaving service options letter from Zurich for the PRSA scheme that I was on with my previous employer. I got 5 options as listed below and I'm not sure which to choose or perhaps, only one may apply given my current status.

If I'm unemployed and likely will be for another few months, is 'deferred benefit' the only option I can choose below? Does my fund stay invested if I go with this option or exactly what happens?

Additionally, is there a cut-off point to complete your leaving service options letter? For example could I wait a few months until I get employment or am self-employed again and then select to transfer to a new PRSA or scheme? Any disadvantage to doing this rather than selecting 'deferred benefit' right now?

1) Deferred benefit
2) Transfer to a Revenue Approved Pension scheme
3) Transfer to a new PRSA with another Life office
4) Resume contributions through payroll deduction with your new employer
5) Resume contributions from your own bank account

Thanks in advance for any insights!

 

[LDFerguson]

If I'm unemployed and likely will be for another few months, is 'deferred benefit' the only option I can choose below?

1) or 3)

Does my fund stay invested if I go with this option or exactly what happens?

It does. Your fund stays in the same fund choices as before. Just no more contributions going into it.

Additionally, is there a cut-off point to complete your leaving service options letter?

No.

For example could I wait a few months until I get employment or am self-employed again and then select to transfer to a new PRSA or scheme?

You could do just that.

Any disadvantage to doing this rather than selecting 'deferred benefit' right now?

Deferred benefit is the default choice, i.e. if you do nothing at all now your fund just stays invested where it is now.

 

[conor_mc]

I would add that if your former employer is paying the pension scheme charges and your funds have low fees, you’re probably better off not rolling it into your next employer’s scheme in the long run. Better options at retirement to have a few pots that can retired at different times than one big one. Whilst you could roll it over to a personal PRSA arrangement, you might end up paying higher fees.

 

[SClarke]

Thanks @LDFerguson , appreciate the information. For option '3': Transfer to a new PRSA with another Life office - so technically I could open a new PRSA as unemployed and transfer the fund amount across? Could I then contribute the bare minimum each month like 20eur to keep it ticking over? And then, if I were to get set-up as self-employed in a few months time could I keep this same PRSA or would I have to open new one again based on the new circumstances?

 

[SClarke]

I would add that if your former employer is paying the pension scheme charges and your funds have low fees, you’re probably better off not rolling it into your next employer’s scheme in the long run. Better options at retirement to have a few pots that can retired at different times than one big one. Whilst you could roll it over to a personal PRSA arrangement, you might end up paying higher fees.

The PRSA from my former employer is 98% allocation and 1% AMC, so I guess I could get better with 100% allocation? The fact that the option says "Transfer to a new PRSA with another Life office" - would that require me to set-up a new PRSA with a different provider e.g. former employer's PRSA is with Zurich, would I then have to go to Irish Life or another vs going with Zurich again for my new PRSA? I'm not aware of any providers of non executive, 100% allocation, 1% PRSAs with IL or other providers but perhaps they do exist. Thanks for the insights too!

 

[Fortune]

Could I then contribute the bare minimum each month like 20eur to keep it ticking over?

There's no need to pay anything to keep it ticking over.

 

[conor_mc]

The PRSA from my former employer is 98% allocation and 1% AMC, so I guess I could get better with 100% allocation?

The allocation % only applies to money going in, so that’s a moot point once you leave employment and can no longer contribute.

Depending on the size of your fund, I think you can get execution-only PRSA’s for less than 1%.

Given the relatively poor allocation rate though, I’m guessing the employer isn’t quite a tier 1 employer that’s definitely gonna be around at retirement age - if so, I’d consider that a second reason to take it under your own control in a PRSA.

Sorry, ignore advice above, thought it was an employer scheme to personal PRSA question. Better advice below from @GSheehy.

 

[GSheehy]

The original PRSA was an advised product. You received advice on setting it up. The leaving service option papers would have noted the advisor. Maybe ask the advisor what you should do and then revert with his/her recommendation and some of the posters here can comment on that.

I'm not aware of any providers of non executive, 100% allocation, 1% PRSAs with IL or other providers but perhaps they do exist

To me, this reads that you are not comfortable at all with an execution only transaction.

If you keep this PRSA and carry it forward to a new employer or use it as a self-employed PRSA then the same allocation rate (and AMC) will apply. For an advised product the allocation rate wasn't poor but you're not making use of the advisor attached to it. If you keep this PRSA then that advisor will be attached to it for it's duration, unless you change that. You 'own' the PRSA, your employer has no say in what you can do with it even if they were contributing to it.

All transfers of PRSAs get 100% allocation. You can't loose anything in that transaction.