Limit on transfers to PRSAs

G

Gandorf

Guest
Hi there,

I am currently a member of a company pension scheme. I am leaving the company and joining another company, who do not offer such a scheme. I was therefore hoping to set up a PRSA and transfer the proceeds of my company pension into it. I have been in the current scheme longer than the vesting period.

I have been told that as the value of my company pension exceed 10,000 euro, I will not be able to transfer it to a PRSA. I read most of the documents on the Pension Board website, and failed to find such a limit, so I mailed the Pensions board to confirm this. They told me that the act does not place any limit on the amount that may be transferred, but that there is a requirement to have a Certificate of benefit Comparison completed where the value exceeds 10,000 euro.

I have also contacted a number of PRSA providers and they have all told me that there is a blanket ban in the industry on accepting transfers of over 10,000 euro. This means that irrespective of what the pensions act may or may not stipulate, there is no way for anyone to actually transfer from an occupational scheme where the value exceeds 10,000 euro.

The PRSA providers basically told me that this is because there is a need to have a aforementioned Certificate of Benefit Comparison completed. This in turn requires insurance, which, I have been told, is so expensive that the charges that an actuary would apply would be prohibitive.

This leads to what in my opinion is a completely crazy situation:

- I can transfer any value from an occupational scheme to another occupational scheme, with no difficulties.
- I can transfer any value from an occupational scheme to a buy out bond,
with no difficulties.
- I can transfer any value from a PRSA to an occupational scheme with no difficulties.
- However, for some reason it's been decided that I am not intelligent enough to decide what to do with my own pension in the event that I wish to transfer from my occupational scheme to a PRSA. To save me from myself I need to pay an actuary, except, as the costs are too great the PRSA providers have all decided to ban this option. I would love to know why do these different standards exist for occupational pensions and PRSAs?

This means that in practice, PRSA's are useless as a vehicle for maintaining a single coherent pension as I progress through my working life. I'm required to leave a trail of pensions or buy out bonds behind me as I move from job to job. I assumed that PRSAs were intended to make pensions easier to understand and more portable. It seems from my experience that this is not the case.

I understand that a PRSA might not be the best option in any given situation, and it might be better to take a buy out bond, but not to even have the option is galling.

As I'm not an expert in what is proving to be a singularly confusing area, I apologise if any of the above is incorrect. I'd love to know what the more knowledgable amongst the AAM community have to say.

Thanks,

Gandorf.
 
What you post above is accurate as far as I know and there is an effective limit (due to the costs involved) on transferring occupational funds, other than those worth under €10K (was lower up to recently), into a PRSA which is a bit of a pain alright. Not sure that you can do anything about it or if there are any plans to address this issue. The requirement for an actuarial statement explaining if/why such a transfer is the most appropriate course of action for the individual is ostensibly for the benefit/protection of the individual but obviously limits their options somewhat. Note that other than the additional hassle with tracking things etc. there is nothing necessarily wrong with having pension savings split over multiple schemes/funds but that might not be any consolation to you. Might be worth contacting the Pensions Board asking them about this limitation and what, if anything, might be done about it in the future?
 
I'm not sure about this, but can an individual have more than one PRSA?

If so, then a possible solution might be to set up a number of PRSAs to ensure that none of them exceed the €10k limit.
 
Yes. I already have two PRSA contracts, albeit only one active at any one time. In fact even though they are both with the same provider (Eagle Star) I was forced by their administrative systems to have two - one was my original PRSA set up standalone and then included under my former employer's "umbrella". The second is my new one with my current employer. They have exactly the same charges and should really be merged but for some reason ES's system could not cope with this. :confused: Maybe the approach suggested above would work but it would be a share if one had to resort to such convolutions in order to effect what should really be a straightforward transfer...

Update: correction - I have two PRSAs (1) one that was started "standalone", then transferred into my former employer's scheme and then transferred on into my current employer's scheme (all with ES) and (2) a second one that was created to deal with a single lump sum contribution of backdated contributions which accumulated while the current employer was getting started up in Ireland and only remitted after a few months (technically in breach of the minimum delay required but unavoidable and not a problem to me).
 
Thanks ClubMan,

From the Pensions Board reply to my original query, they are aware that there is a need to have an actuarial statement prepared when the amount exceeds 10,000 euro. They suggested that I contact some of the PRSA providers to enquire about the process. This indicates to me that they are not aware of how the industry is dealing with the requirement - by simply banning all transfers over a certain amount.

I've since replied to them with the details of the blanket ban on such transfers. To me this seems contrary to the intentions of the pensions act. One of the primary attractions of PRSA - portability - has been effectively crippled. As you have said, in attempting to nanny consumers they have in fact deprived them of choice. It will be interesting to see what the Boards view on this matter is.

I've also noted that details of this ban are quite hard to come by, in fact some of the people from the PRSA providers weren't aware of it, and I've found very little about it online. I guess this means that it's rarely an issue. Perhaps PRSAs just aren't that popular :)

Another issue that I fail to understand is why does this restriction apply only to transfers to PRSAs? Why if I am moving from an occupational scheme to another occupational scheme am I not required to have an actuarial statement prepared?

Thanks for all your advice, this board is a great help when faced with the madness of pensions....

Gandorf
 
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