Taking Early Retirement to Pay down Debt

J

jim masters

Registered User
Messages
14
Hi
I have the following pensions
  1. DB from job no 1 - 13k p.a. when I hit 65
  2. DB from current job - 18/80 x average salary when i hit 65
  3. Buy out bond - currently worth 142k
  4. RCC pension - currently worth 56k
  5. PIA pension with IL - currently worth 174k
  6. DC pension with IL - currently worth Eur 150k
I am now 50 so was looking into taking one of the pensions now to avail of the tax free lump sum both to pay down some debt i need and in case the rules change under a new gvt.

If I was to take the But Out Bond now can I take all of the 142k tax free and take a further 58k later from another to make up the 200k limit or how does the 25% and 200k limit work ?

Many thanks for your help with this.
 
Do all six of the above relate to six different employments?

What do RCC and PIA stand for in this context?
 
LDFerguson said:
Do all six of the above relate to six different employments?

What do RCC and PIA stand for in this context?
Click to expand...
3 , 4 and 5 relate to one employment. Numbers 1 ,2 and 6 from individual other employers - so 4 employers in total

Personal Investment Account (PIA):
This is the defined contribution
part of your total Retirement Fund.
Contributions invested in this account
are placed in the investment strategy
or fund(s) of your choice and will rise
or fall in line with the investment
performance of the chosen strategy/
fund(s).

Retirement Credit Account (RCA):
Part of your total Retirement Fund.
It is the total of all the monthly
Retirement Credits granted while
you are employed with the Bank,
as well as the annual investment
bonuses granted by the Trustee to
active members or the Revaluation
Increases granted to deferred
members.
 
jim masters said:
3 , 4 and 5 relate to one employment. Numbers 1 ,2 and 6 from individual other employers - so 4 employers in total

Personal Investment Account (PIA):
This is the defined contribution
part of your total Retirement Fund.
Contributions invested in this account
are placed in the investment strategy
or fund(s) of your choice and will rise
or fall in line with the investment
performance of the chosen strategy/
fund(s).

Retirement Credit Account (RCA):
Part of your total Retirement Fund.
It is the total of all the monthly
Retirement Credits granted while
you are employed with the Bank,
as well as the annual investment
bonuses granted by the Trustee to
active members or the Revaluation
Increases granted to deferred
members.
Click to expand...

Thanks. Only time I saw those terms before was when looking at the pension scheme of one of our pillar banks.

You must retire 3, 4 and 5 together. Combined fund is €372,000. You could take 25% as a lump sum now ... €93,000 ... and put the balance into an Approved Retirement Fund (ARF) ... €279,000. No obligation on you to withdraw funds from the ARF until the year in which you turn 61.

You could do the same with 6.
 
LDFerguson said:
Thanks. Only time I saw those terms before was when looking at the pension scheme of one of our pillar banks.

You must retire 3, 4 and 5 together. Combined fund is €372,000. You could take 25% as a lump sum now ... €93,000 ... and put the balance into an Approved Retirement Fund (ARF) ... €279,000. No obligation on you to withdraw funds from the ARF until the year in which you turn 61.

You could do the same with 6.
Click to expand...
many thanks for this - much appreciated. Any idea to what extent revenue and or pension providers have records of ex gratia payments such as redundancy which were previously taken tax free ?
 
jim masters said:
many thanks for this - much appreciated. Any idea to what extent revenue and or pension providers have records of ex gratia payments such as redundancy which were previously taken tax free ?
Click to expand...
these are separate and not relevant to pension calculations.
 
jim masters said:
many thanks for this - much appreciated. Any idea to what extent revenue and or pension providers have records of ex gratia payments such as redundancy which were previously taken tax free ?
Click to expand...

I don't know how good Revenue are about keeping such records. But if you previously waived your right to a tax free lump sum from a pension scheme and subsequently retire it, there's a question on the retirement application form that asks you if you did.
 
jim masters said:
I am now 50 so was looking into taking one of the pensions now to avail of the tax free lump sum both to pay down some debt
Click to expand...

It does not sound like a great idea to cash a pension early to pay down debt.

I presume you plan to continue actually working and earning?

You should consider doing a Money Makeover to see if there is a better strategy for your finances.

Brendan
 
jim masters said:
in case the rules change under a new gvt.
Click to expand...

They could change.

But the next government will be there for only 5 years so it would depend on what government is in power when you draw down your pension which could be any time over the next twenty years.

The tax reliefs are under review and they might well increase, though if you take some out now, and it's later increased, I am sure you would benefit.

Pensions - KPMG calls for significant increases to SFT and TFLS

I can’t see the Government adopting KPMG’s proposals in full but they raise some interesting points - https://www.irishtimes.com/your-money/2024/02/20/kpmg-calls-for-increase-in-tax-free-pension-ceiling-and-lump-sums/
www.askaboutmoney.com

Brendan
 
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