Navigating SFT changes

[nest egg]

Access to OPS - From 50 onwards where employment has terminated and all links with the employer linked to the scheme are severed, otherwise scheme NRA (lowest possible 60)

Access to PRSA - Between 50 – 60 where employment has ended and member is no longer economically active (retired from all employments). Age 60 otherwise.

I want to make sure I've understood this correctly.

Scenario 1: You 'retire' from a position with an OPS at 50. You want to continue to work elsewhere, say on a part-time basis, topping up your income from your OPS/ARF. No problem.

Scenario 2: Same as above, but you had a PRSA instead. In this case, you can't work, is that correct?

 

[GSheehy]

No, there's no ban on a person ever working again.

Between 50 - 60 where employment has ended and the member is no longer economically active (retired from all employments) at the time of taking the benefits.

You might have a situation where an OPS was being wound up and the value was transferred to a PRSA without the need for a Certificate of Benefits Comparison. At some stage in the future you might want to mature that early, but might be still economically active, so you might be snookered.

That's my understanding of the difference but I believe interpretations vary between product providers on that rule in terms of what they request as proof of not being 'economically active' at a maturity prior to 60.



Gerard

www.execution-only.ie

 

[LDFerguson]

The question on a PRSA retirement form asks "If you are between 50 and 60, have you retired from all employments?" or words to that effect. If you answer that truthfully at the time you're retiring your PRSA, there's no restriction on you obtaining other paid employment in the future.

 

[nest egg]

No, there's no ban on a person ever working again.

Between 50 - 60 where employment has ended and the member is no longer economically active (retired from all employments) at the time of taking the benefits....

Thanks for taking the time to clarify. The idea of allowing the draw-down of part of your pension pot, so that you could continue to work part-time, if you so wish, is a great idea. It benefits the individual and the economy. In light of that, you'd really have to wonder about the purpose/necessity of these rules, especially when it's straightforward to work around them. You can be 'economically inactive' the day you access your retirement pot, start your own business the next, and it appears this has no effect on the ARF/annuity you're now accessing. Time to simplify these rules as they don't seem to serve any real benefit.

 

[ClubMan]

You can be 'economically inactive' the day you access your retirement pot, start your own business the next, and it appears this has no effect on the ARF/annuity you're now accessing. Time to simplify these rules as they don't seem to serve any real benefit.

What's there to simplify when you can do this already?

 

[nest egg]

What's there to simplify when you can do this already?

Drop the requirement to be 'economically inactive'

 

[LDFerguson]

There's a fair amount of needless complication in the various rules in my opinion. Examples off the top of my head...

• Retirement between 50 and 60 on an Occupational Pension Scheme or Buy-Out Bond. You must have ceased the employment and disposed of shares in the employer company (if you had any), but you don't need to be economically inactive. So you could be in a full-time job at 50 and retire a Buy-Out Bond from a previous employment.
• Retirement between 50 and 60 on a PRSA. You must be economically inactive at the time but if you have shares in the employer company you don't need to dispose of them.

I see little logic in having two different rules.

• Maximum employer contribution to an Occupational Pension Scheme / Master Trust is a calculation based on salary, service and existing pension benefits.
• Maximum employer contribution to a PRSA is 100% of salary.

Again - I don't see the logic in having two different rules.

There's other examples, e.g. different tax treatment of an Occupational Pension Scheme and a PRSA if you want to transfer to an overseas pension scheme e.g. if you emigrate (or perhaps return home after working in Ireland for years).

Regards,

Liam
www.FergA.com