Vested PRSA Charges

Hi
I am trying to decide how to handle my current prsa as it matures next year as I turn 60. Value is 168k but I don't have €12,700 a year so options are limited.
Can anyone enlighten me regarding charges to change my PRSA into a Vested one and annual costs associated - pot value would be €126K after my 25% tax free with drawl.
Is it true that I would have to ring fence €63,500 and hold it till I'm 75 when I would then have to withdraw it (obviously I'd prefer to take it sooner) and the remaining €62,500 I can take out at 4% a year till age 70 and 5% a year after that.
It seems to me that the smaller your pension the more you are going to pay over time just for the pleasure of leaving it invested, the costs of ARF AMRF etc are huge, I can't see why the Government won't allow us to invest in An Post State Bonds that have no associated charges and a half decent return instead of looking after the Insurance industry and keeping us chained to them - at best they should regulate them with respect to charges.
Thanks in advance for any help here.

Once you claim from a PRSA it automatically becomes a vested PRSA so you don't need to make any product changes at all.

So, whatever charges are on your current PRSA will be the charges that carry forward.

Kevin
www.thepensionstore.ie

The charges on an ARF will depend on where you get it, and who you get it through, but it doesn’t necessarily have to cost any more than a post-retirement PRSA. Vested PRSA‘s won’t facilitate automatic income payments (These would typically need to be requested as required).

But, you’re right, the smaller the fund in Ireland the more restrictive things get with the AMRF requirement (Introduced to save us all from ourselves!)

Kevin
www.thepensionstore.ie

Minnie said:

Is it true that I would have to ring fence €63,500 and hold it till I'm 75 when I would then have to withdraw it (obviously I'd prefer to take it sooner) and the remaining €62,500 I can take out at 4% a year till age 70 and 5% a year after that.

Click to expand...

No that's not true.

The first €63,500 can be put into an AMRF or left in the "AMRF part" of your Vested PRSA. You are permitted to withdraw up to 4% per year from an AMRF or this part.

The remaining balance can be put into an ARF or an "ARF part" your Vested PRSA. You can withdraw any amount you like from an ARF. The 4% or 5% you mention are minimum withdrawals. There is no maximum.

At age 75, your AMRF becomes an ARF. Alternatively if you acquire guaranteed lifetime income of at least €12,700 per year before then, your AMRF becomes an ARF. A full State Pension will meet this requirement.

Any withdrawals from an ARF or AMRF will be taxable as income so even if you intend to withdraw the whole ARF amount in a short period of time, it's generally advisable to spread it over several years to keep the tax rate down.

I'd imagine that your PRSA has an annual charge of 1% or higher per year. If you leave the fund in the Vested PRSA, the same charge will continue. You should be able to set up an AMRF and ARF with a lower annual charge. This also makes it easier to see which part of your fund is the AMRF and which is the ARF.

Regards,


Liam
www.ferga.com

Hi Kevin, many thanks for your informed replies - I'm leaning more towards a vested PRSA so I can take the monies out over 3/4 yrs at below tax thresholds and put it into a 5/10 year State Savings Bond.
Thanks again

Hi Liam, many thanks for your reply, I did indeed think the 4% and 5% were maximums - very scary so the fact that they are minimums makes a huge difference.
Thanks again