transfer your pension

Don’t leave it behind – transfer your pension

Transfer your Pension to get the most out of retirement

A SIMPLE OVERVIEW OF THE MOST COMMON WAYS OF MOVING A PENSION INVESTMENT FUND IN IRELAND

The member can usually leave their benefits paid up in their pension scheme for at least 2 years after leaving service. After this and where the transfer value is less than €10,000, the trustees may make a transfer payment to a Personal Retirement Bond/PRSA without the member’s consent.

The following conditions apply to the transfer :

  • The member must have left service for at least two years.
  • At least 30 days written notice must have been received by the member before the transfer is made. The notice should provide details of the insurance company/PRSA provider where the transfer is being placed.
  • There must not be any outstanding request from the member for a transfer payment to another scheme – Personal Retirement Bond or PRSA. If the transfer exceeds €10,000 then the trustees of the scheme may apply to the pensions board to make a transfer as outlined above without the member’s consent.

TRANSFER TO NEW EMPLOYER’S SCHEME

Instead of leaving the pension with the previous employer’s scheme, the member may make a transfer to their new employer’s scheme.

Once the appropriate transfer is made, the trustees of the previous scheme are discharged from any further liability. It is important to note that the transfer of benefits from a previous employer’s scheme has to be paid out at the same time as benefits are paid from the scheme it has been transferred into.

TRANSFER TO A PERSONAL RETIREMENT BOND

A Personal Retirement Bond or Buy-Out Bond (as it is also known) is a Pension Bond by the scheme trustees in the individual’s own name and has the same tax-exempt status as the previous occupational pension scheme. Effectively the member assumes full responsibility for the pension fund.

This happens when the member leaves the scheme and either has paid-up benefits in the scheme or the scheme is being wound up. The bond is issued in the individual’s own name and has the same tax-exempt status as an approved Occupational Pension Scheme.

This usually occurs when the individual leaving the scheme has preserved benefits or the scheme is being wound up. The individual can usually claim benefits from age 50. (some exceptions to this rule apply).

It is not necessary to retire to claim from a personal retirement bond unless it is in relation to the current employment. The bond may be matured on early retirement after age 50.

TRANSFER TO A PRSA (PERSONAL RETIREMENT SAVINGS ACCOUNT)

An individual member with less than 15 years’ service who is either leaving service or the scheme is being wound up can take a transfer to a PRSA.

In order to effect this, transfers to a PRSA require a letter stating the reasons why it would be in the best interest of the individual to transfer from the scheme to the PRSA. This is known in the industry as a ‘Reasons Why Letter’.

The receiving investment company/pension house must send this out to the previous scheme in order for the transfer to take place along with a ‘Willing and Able ‘ letter which means the receiving investment house is willing and able to accept the transfer.

Some transfers need a written certificate (certificate of Benefit Comparison) to transfer to the PRSA and there is sometimes is a cost here that has to paid to an actuary to do the work.

 There are some  reasons why an individual member would need none of the above which are;

(a) the transfer value is less than €10,000.

(b) the scheme is winding up.

(c) the transfer represents a refund of contributions.

(d) if the transfer value is less than 2 years of service.   

TRANSFER TO AN UNFUNDED SCHEME

Public sector employees may be able to transfer into a public sector unfunded scheme if the scheme rules allow.

TRANSFER TO ANOTHER PERSONAL PENSION

Personal Pensions approved on or after 6 April 1999 allow for a transfer to another personal pension.

Before this date, transfers can may be possible by agreement between the individual and the personal pension provider.

Please note partial transfers are not allowed.

The Personal Pension (RAC) can also be transferred to a PRSA but the adviser must put in writing the financial consequences of replacing the personal pension with the PRSA. However, a PRSA may not be transferred to s Personal Pension.

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