Pension closed before Maturity

[redbhoy]

Hi,

During a conversation with a friend she mentioned that her father had a pension and was nearing retirement but got laid off. He was in his late 50's methinks. She said that he got paid his pension but it was worth virtually nothing as it hadnt matured. This kind of worries me.
I pay into a pension at present and have a few quick questions if anyone cares to answer.
(i) if i have an amount, say 10K, paid into my pension and decide to leave my job and cash it in, how much would it be worth to me?
(ii) Are all pensions transferable to another employers pension or even a private one?
(iii) is it possible to leave it as is, until i retire, without adding anything else and cashing it in then?

Please forgive my ignorance as i havent really a clue as to how these things work. Im still only a nipper.

Thanks

 

[ClubMan]

She said that he got paid his pension but it was worth virtually nothing as it hadnt matured.

What do you mean by it not maturing?

(i) if i have an amount, say 10K, paid into my pension and decide to leave my job and cash it in, how much would it be worth to me?

You can only cash in a pension before retirement in very restricted circumstances - e.g. you are in an occupational scheme for less than two years (cumulative - i.e. including any time served "transferred in") and then you only get your own personal and AVC (i.e. not also employer contributions) back net of 23% (?) tax. You can also cash in PRSAs under certain restricted circumstances. If you have paid €10K into a pension then the value of the fund will presumably fluctuate daily (but hopefully with a long term upward trend) in value.

(ii) Are all pensions transferable to another employers pension or even a private one?

An occupational fund can be transferred to another occupational fund on switching employment. Or you can switch to a buy out bond (like an individually owned pension policy). In theory it may be possible from an occupational fund to a PRSA but in practice I think that there are still problems with this. You cannot transfer an occupational fund into a personal pension plan. PRSAs are obviously portable between employments. Personal pension funds are kept separate from occupational and PRSA pension funds as far as I know.

(iii) is it possible to leave it as is, until i retire, without adding anything else and cashing it in then?

In most cases yes - when you leave an occupational scheme you normally have the option to leave your money invested there, transfer to another occupational scheme (immediately or later on) or transfer to a buy out bond. If you have less than two years membership (total) then you can also opt for a taxed refund of your own contributions.

Does that help at all? If you need more comprehensive advice then post more detailed questions and/or seek independent, professional assistance.

 

[Decani]

I've a question. What if someone wishes to emmigrate? What can they typically do with their fund?

 

[redbhoy]

Thanks for that reply Clubman.
As i said earlier I havent really got an inkling as to how these things work. It was just a casual conversation and it got me wondering. I took it up that her father had paid in a good lot of money over a lot of years (30 or so) and because he was let go and it didnt 'mature' (go its full term??) he was paid a singificantly lesser amount than he expected as the company folded. Maybe it was his fault for not going about it correctly?
I had worked in a company previously and my pension was 'froze' so when i started here in this hellhole(",) i could transfer the old pension money into the new one.

 

[ClubMan]

I took it up that her father had paid in a good lot of money over a lot of years (30 or so) and because he was let go and it didnt 'mature' (go its full term??) he was paid a singificantly lesser amount than he expected as the company folded.

You would need to get more detailed information about what happened in order for people to comment. In a company liquidation situation it is possible that the occupational pension scheme can be wound up in which case members will normally be given the option of (a) transferring to another occupational scheme or (b) transferring to a buy out bond (basically a standalone pension policy held by the individual). I don't know of any situation in which the pension funds would be encashed so I don't understand the bit about him being "paid a singificantly lesser amount than he expected". Or was he also retiring at the time and his accumulated pension fund was simply less than he expected? It would help if you could tell us how much he paid in in total, what charges applied and how much the fund was worth at the time of the wind-up but I presume that you don't have these details.

Maybe it was his fault for not going about it correctly?

Impossible to tell without more info.

I had worked in a company previously and my pension was 'froze' so when i started here in this hellhole(",) i could transfer the old pension money into the new one.

I don't understand your point.

 

[redbhoy]

Sorry. If i had cashed in my pension when i left my last job I would have received something like 1.5K but i didnt and ended up transfering about 4K into my new pension.
Maybe her father cashed in and lost the companies share and paid tax on the rest as you explained earlier.

 

[ClubMan]

Normally the option to cash in would only be available if one had less than two years membership of the scheme (and maybe other restricted circumstances) and I assumed that this would not apply in the original case outlined above? Without more detailed information we are engaging in a lot of guesswork to be honest.

 

[Savvy]

I believe the 23% is subject to change as it is (low tax rate+3%)

 

[ClubMan]

I don't undertand what you mean by "subject to change"? Do you mean if the standard tax rate changes then this will change? If that's the point then you are correct.