pension options on redundancy

[LDFerguson]

Going through LDFerguson's excellent after redundancy pension options link, above, I notice that PRSA transfer is not allowed for those with more than 15 years pensionable service. Can anyone tell me why this is the case and why 15 years?

When the powers that be were setting out the rules for PRSAs they were worried that people would be badly advised to transfer from superior pension schemes to PRSAs just to generate commission for the PRSA salesman. This happened in the UK and it took years to unravel the mis-selling. So they laid out rules governing transfers from schemes to PRSAs and one of them is the 15 year one.

Also if one chooses to transfer the fund value out of the ex-company DB scheme to a BOB does this mean that an annuity has to be purchased when retirement age is reached or can an ARF/AMRF be chosen instead?

The rules governing how you can take your benefits from a BOB are the same as the rules governing retirement from the original scheme. So unless you were a 5% director of the original employer, you won't have the ARF/AMRF options at retirement, except in respect of any funds you accumulated through AVCs.

Cheers, Liam

 

[LDFerguson]

by the time we get to retire all state pensions will be means tested,you will be no better off than the fella who never worked or paid into a private pension scheme,your better off investing that pension money in property or beer or holidays.

If things get to the point that the State Contributory Pension has to be means tested, they will have reduced the amount of it first.

You've just convinced me even more to pump money into my private pension - I don't want to relying on €100 per week or whatever they reduce it to.

 

[Barney Magoo]

Thanks for the explanation Liam.
I suppose my concern is that the goalposts have moved significantly since the original rules on PRSAs were introduced. There is a perception that PRSAs are more flexible than options that must purchase annuities, not least in terms of the value to the persons estate after death.
Also, when interest rates are as low as they are now, and likely to be for a while. the value to the pensioner from a (locked in) annuity purchase can be almost derisory. Surely it is time for more flexibility on what people can do with their pension pot?

 

[LDFerguson]

...the value to the pensioner from a (locked in) annuity purchase can be almost derisory. Surely it is time for more flexibility on what people can do with their pension pot?

I agree fully. ARF options should be available to all, except those in Defined Benefit schemes, in my opinion. I know this has been discussed between Revenue, Pensions Board and Government but I don't know how close we are to seeing it a reailty.

 

[harza]

Liam,

Being doing some more looking into this. At present the value of the pension is just over €10,000. Given that I would have to pay approx €500 (5%) to move to a PRSA am I better of opting to stay in employer scheme?

Am I right to think that I can move to a PRSA or PRB at a later stage when I start making pension payments again?

Keeping in contact with former employer's pension trustees would not be an issue as I am happy to not change funds and the only correspondence to date has been an annual statement.