Personal Retirement Bond

M

Marine 8

Registered User
Messages
16
Hi experts,
I took voluntary redundancy in 2012 and availed of the tax free lump sum at the time.
I have a deferred defined benefit pension and the recent statement mentions a transfer value of around 260k which can be applied to a PRB.
I've tried to Google this but am a bit bewildered as to whether this is the way to go, or to leave things as they are.
If it's relevant, I have no mortgage or debts and have cash savings.
Any info would be appreciated or links to a simple explanation of the pros and cons.
Many thanks.
 
Option 1: Leave it where it is.

Advantages;
  • Charges are likely to be lower in a large group scheme
Disadvantages;
  • Any retirement options, including early retirement, are bound by scheme rules and require permission form the trustees.
  • 65 is the standard retirement age for corporate schemes so that would be the earliest age you could claim benefits.
  • Large schemes have relatively limited investment options since they’re built for groups of employees, not individuals.
  • Trustees are not obliged to keep in contact with deferred members.
  • If the scheme is closed in the future you could be transferred out anyway.
Option 2: Transfer it to a Personal Retirement Bond (PRB)

Advantages;
  • Full cash value is held under one single contract that is owned by you personally.
  • Your accumulated rights are preserved i.e. all salary and service details are recorded which maintains your rights to the ‘lump sum only’ option.
  • You can access your benefits from a PRB from age 50.
  • You have full control over how your money is invested and can manage it as part of your overall plan.
Disadvantages;
  • The annual management charges tend to be higher depending on the funds and/or assets chosen.
As a deferred benefit, the trustees are the legal owner whereas with a PRB you become the legal owner.

Kevin
www.thepensionstore.ie
 
You can also transfer it into your current employment pension scheme, if this is an available option, at zero charges, but better check the charges and the fund options/scheme rules.

PRB’s often have early exit charges,which may, or may not be an issue, some, lock you in for 5 years, so shop around.

Better off getting Independant Financial Advice, from an Independant broker will search the whole market for you, and give tou a broad range if options different for a fee.
 
As it's a defined benefit, you would also want to make a comparison between that stated benefit and the transfer value you are being offered.

Accepting a transfer value shifts the risk from that scheme over to you and people aren't always given fair value for that exchange.

Kevin
www.thepensionstore.ie
 
Thank you both for your advice. The transfer value is definitely lower than the annual stated benefit. I will investigate further.
 
This issue is well discussed on this forum in the past so plenty to research here and plenty diverse opinions.
Be aware that many financial advisors who only sell DC and PRSA pensions do not fully understand the subtly of defined benefit schemes and the array of issues to consider.
 
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