Key Post Should you contribute to a pension fund if you are in danger of breaching the €2m limit?

[Conan]

Can I please ask a naive question linked with 2.0m threshold. I believe this is based on the projections at current retirement age of 65. What happens if someone decides to retire early from DB occupation pension. For example, projected pot may breach 2.0m at 65 but they retire at 61, it might be 1.5m at retirement.

The €2m limit (c€2.15m in practice) applies at the time the benefits are accessed.

 

[bish123]

So taking early retirement could be another lucrative option if someone is at risk of breaking €2.15m threshold at the age of 65.

 

[ClubMan]

So taking early retirement could be another lucrative option if someone is at risk of breaking €2.15m threshold at the age of 65.

No matter what size the pension fund is one can take up to €200k as a tax free lump sum. If 25% of the fund would be more than that then the excess, should it be taken, is taxed at only 20%. In general it presumably makes sense to aim to maximise one's pension pot. Especially given that whatever's left after taking a red free lump sum will generally be rolled over into an ARF ongoing investment for paying an ongoing retirement income.