Question about cashing in pension with an employer that i no longer work for

[coolaboola12]

Hi All
Was reading all the info online but am still confused. Hoping someone could clarify for me . I have a pension with an employer that i no longer work for, i believe i can access this at 50 years old, is this correct ? and if so , how much can i access ? Can i draw down the whole lot if i wanted the cash to buy a house for example or is only the 25% i can access.

I also have a new pension with my current employer, when is the earliest i can access this assuming i stay working for the same company, is it 60 ? If so can i access the lump sum at 60, draw the obligatory 4% and continue working until 67 ?

Thanks for anyone that can help clear this up for me

 

[LDFerguson]

I have a pension with an employer that i no longer work for, i believe i can access this at 50 years old, is this correct ? and if so , how much can i access ? Can i draw down the whole lot if i wanted the cash to buy a house for example or is only the 25% i can access.

I'm going to assume this is in an Occupational Pension Scheme and not a PRSA. You can take early retirement from age 50 onwards. There are two methods of calculating your maximum lump sum: - (1) salary and service calculation. If you use this method you must use any balance to buy an annuity. But if the fund is small and/or your salary was high and/or you were many years in the job, it can sometimes work out that this calculation allows you to draw the entire fund out as a tax-free lump sum. (2) 25% of fund. If you use this method, then you can take 25% of the fund as a tax-free lump sum. It is possible to take the remaining 75% out as a lump sum also, but this amount will be taxed as if you earned it. So if you're already on the high rate of tax in your job, you could lose 52% of the taxable portion of the pension fund to tax, PRSI and USC. For this reason, it's generally preferable to leave withdrawing the taxable part of your pension fund until you actually retire from work and your taxable income drops. There's also the argument that pension funds are intended to provide you with an income for when you retire. Cracking open the piggy bank at 50 leaves less for when you retire. But sometimes you may have requirements that over-ride these considerations.

I also have a new pension with my current employer, when is the earliest i can access this assuming i stay working for the same company, is it 60 ? If so can i access the lump sum at 60, draw the obligatory 4% and continue working until 67 ?

Again I'm going to assume this is in an Occupational Pension Scheme and not a PRSA. Earliest you can retire while still working for the company is the Normal Retirement Age on the pension. If it's a group scheme for multiple employees this is not a movable feast. It might be 65. You'd have to check with the pension scheme. If the pension scheme was set up just for you, you could ask your employer to change the Normal Retirement Age to 60.

If so can i access the lump sum at 60, draw the obligatory 4% and continue working until 67 ?

Yes, although the same considerations regarding tax on the 4% annual income still apply here. As do my reservations about drawing on your pension fund early unless you badly need it.

 

[coolaboola12]

I'm going to assume this is in an Occupational Pension Scheme and not a PRSA. You can take early retirement from age 50 onwards. There are two methods of calculating your maximum lump sum: - (1) salary and service calculation. If you use this method you must use any balance to buy an annuity. But if the fund is small and/or your salary was high and/or you were many years in the job, it can sometimes work out that this calculation allows you to draw the entire fund out as a tax-free lump sum. (2) 25% of fund. If you use this method, then you can take 25% of the fund as a tax-free lump sum. It is possible to take the remaining 75% out as a lump sum also, but this amount will be taxed as if you earned it. So if you're already on the high rate of tax in your job, you could lose 52% of the taxable portion of the pension fund to tax, PRSI and USC. For this reason, it's generally preferable to leave withdrawing the taxable part of your pension fund until you actually retire from work and your taxable income drops. There's also the argument that pension funds are intended to provide you with an income for when you retire. Cracking open the piggy bank at 50 leaves less for when you retire. But sometimes you may have requirements that over-ride these considerations.



Again I'm going to assume this is in an Occupational Pension Scheme and not a PRSA. Earliest you can retire while still working for the company is the Normal Retirement Age on the pension. If it's a group scheme for multiple employees this is not a movable feast. It might be 65. You'd have to check with the pension scheme. If the pension scheme was set up just for you, you could ask your employer to change the Normal Retirement Age to 60.



Yes, although the same considerations regarding tax on the 4% annual income still apply here. As do my reservations about drawing on your pension fund early unless you badly need it.

Thanks for all this, yeah this is all occupational schemes. On the second part about my current pension, if i just left the job at 60 could i retire then and draw the pension ?

 

[RedOnion]

if I have enough built up can I leave the job at 60 and draw that pension ?

You could leave anytime from 50 and draw it.

 

[coolaboola12]

You could leave anytime from 50 and draw it.

Thanks. That's what I wanted to know

 

[LDFerguson]

Ok thanks, I thought that was a legit website

But what about my current company pension, if I have enough built up can I leave the job at 60 and draw that pension ?

If I'm being pedantic, early retirement, (i.e. retiring at an age above 50 that is before the Normal Retirement Age of the pension scheme) can only be done with the approval of the trustees. On some Defined Benefit schemes, the trustees might not permit it. But if it's a Defined Contribution scheme (just building up a pension fund with no promises of a particular level of pension) then the trustees would have no reason to stop you withdrawing early.

 

[coolaboola12]

If I'm being pedantic, early retirement, (i.e. retiring at an age above 50 that is before the Normal Retirement Age of the pension scheme) can only be done with the approval of the trustees. On some Defined Benefit schemes, the trustees might not permit it. But if it's a Defined Contribution scheme (just building up a pension fund with no promises of a particular level of pension) then the trustees would have no reason to stop you withdrawing early.

Ok thanks, this is a contributary pension with a large multinational. Other companies I worked with say I can access at 50 after leaving so I'm sure this one would also