Why have multiple pension pots?

RobinMx

Registered User
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I'm trying to understand how pensions work a bit more. I was surprised to read in another thread that it's recommended to have several retirement savings accounts. When I started to look into things last year, my first step was to hunt down all the tiny pots left in previous employer schemes and merge them all in my current one to make it less complicated. Ah well.

Is the idea that you can start drawing from one pot without touching the others yet? Can you still work while taking out one of the pensions or do you need to stop any paid employment to do this?

I'm looking at: https://www.pensionsauthority.ie/en/LifeCycle/Benefits_payable_on_retirement/Early_retirement/

"In occupational pension schemes, early retirement is generally possible with the employer's and/or trustees' consent from age 50 onwards.
Under personal pension arrangements, retirement benefits can be taken from age 60.
Under PRSA arrangements, early retirement is possible from age 50."

If you wanted to draw from your occupational pension scheme, I imagine you'd need to no longer work there, which is fair. The "employer's and/or trustees' consent" part always made me think it's not something you can rely on though. The yearly brochure I get about my pension always indicates retirement age is expected to be 65. How difficult is it to get the "employer's and/or trustee's consent" in practice, assuming you resigned from the position?

I don't know what "personal pension arrangements" are, so I probably don't have one of these.

I used to have a PRSA but I merged that in too (bunch of post-tax contributions in there made ~8 years ago, too bad I didn't know about the tax relief then!). But reading the above from the Pensions Authority website, if you have a PRSA it sounds like you are free to start drawing from it at age 50 at your own discretion? For example, taking the tax-free lump sum to finish off the mortgage and whatever is left may help with supporting yourself while working fewer hours? If this is correct, I will probably consider opening a PRSA outside of my employer's scheme and redirect any AVCs there (if I understand correctly, these will need to be post-tax contributions I can claim relief on at the end of the year?).

Or do you have to officially retire and draw from all funds at the same time? Do you get the 25% lump sum option on every fund, or is it a once-in-a-lifetime option for the first one?

Thanks for your patience with these probably basic questions. I'm currently throwing extra cash at the mortgage every month, but feeling vaguely guilty for not trying to max out my pension contributions instead and get the "free money" from the tax relief. If some of the funds were partially accessible at 50 at my choice rather than completely out of reach for 30+ years though, I may run some calculations differently.
 
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