Waive right to tax free lump sum and move to a PRSA

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MagsRy

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I am interested in some thoughts on whether to go with the higher option for a redundancy package and waive my right to a tax free lump sum from my pension
The difference between the 2 options is about 40k
I am being advised that I should go with the higher option, then transfer my pension to a PRSA, so I can still avail of the tax free lump sum via the loophole.
I will be 60 in 10 years and would like to be retire at 60.
My current pension value is about 400K. I also have 2 pensions from previous roles which are currently valued at 125K
When I look at the fees for the PRSA (about 1%) v’s the fees for my current pension scheme (about 0.4%), I calculate:
  • The PRSA would cost me 40K over 10 years
  • My current pension will cost me 16K over 10 years
It doesn’t seem make sense to transfer to a PRSA now, as it looks like I would be paying about 24K more in fees for 10 years in a PRSA. Do those calculations seem correct?
I have been told by my current pension provider that I can leave my funds in the pension and move to a PRSA at a later date.
So I am thinking I could take the higher option, and move to a PRSA in a couple of years to reduce the fees I would pay. Does this seem like a good option?
Has anyone experience of moving to a PRSA to take advantage of the loophole?
My original thoughts were go with the lower option and keep my right to the tax free lump sum, but this loophole and moving to a PRSA has my head is melted trying to decide what to do.
 
If anyone can advise, I'd also be interested in any info regarding this, as I'll be getting a redundancy soon and need to decide between the 2 options
 
MagsRy said:
I am being advised that I should go with the higher option, then transfer my pension to a PRSA, so I can still avail of the tax free lump sum via the loophole.
Click to expand...

Have you asked the advisor about your cost/benefit anaylsis calculations?

Does the Reasons Why/ Suitability letter that you received make mention of the right of Revenue to recalculate the redundancy figure, if you go the PRSA route?

Is the scheme being wound-up?

With some growth in fund value, the €24K is more like €37,000 over 10 years.


Gerard

www.prsa.ie
 
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MagsRy said:
When I look at the fees for the PRSA (about 1%) v’s the fees for my current pension scheme (about 0.4%),
Click to expand...
There are PRSA's out there with lower AMCs (0.6% or even less) and 100% allocation if you shop around and use an execution only broker.

MagsRy said:
So I am thinking I could take the higher option, and move to a PRSA in a couple of years to reduce the fees I would pay. Does this seem like a good option?
Click to expand...
Sounds like a prudent approach to me. If the loophole is being closed there will likely be a run in period so you could execute the transfer in that period. Keep an eye on the annual finance bill for any changes and on the revenue pension guidelines.
 
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