Cancelling Pension query - Company contibutions paid

BluE-WinG

Hi All

Recently I was made redundant in my job, I had been saving for it for a number of months and thus was well prepared.

Part of my preperation would be to cancel my pension (I have had it under 2 years so I am within my rights to do so) I was recently informed that if I do so, the company will take back all their contributions (Half of the pension) they made over the past 18 months. I do not feel this is fair as I know for a fact a fair amount of companies would not do that especially in a redundancy situation.

My plan would be to transfer the pension to a PRSA or another Pension provider with a view to cancel it after a few months or a year so that I could receive those funds.

My question is, is this legal? Is this a grey area? And would they invest time and effort tracing the money after it is transferred to confirm you dont cancel the aforementioned pension within a year or two? Do they have any comeback once the pension is in the hands of another provider?

carbsy

You can transfer the total amount (including employer contributions) to another pension scheme or seeing as it's under two years, you can cash it in now and take back only your own contribution.Minus tax of course.

BluE-WinG

carbsy wrote: »

You can transfer the total amount (including employer contributions) to another pension scheme or seeing as it's under two years, you can cash it in now and take back only your own contribution.Minus tax of course.

Aye I'm aware of that. I want to transfer the lot to another provider (with all contributions), with intent to cancel it after a period of time to receive the entire amount, I'm just inquiring about the legality of this and do my employer have any comeback to those funds?

ferga_com

If the rules of the pension scheme say that the employer gets their contributions back if you avail of the refund option, transferring it to another pension vehicle won't help you. You won't be able to access the employer contributions.

Anyway, many scheme rules are worded so that the employer gets their contributions back if you leave within two years, whether you take the refund or transfer to another pension arrangement. Maybe yours is different - yours might allow for all contributions to be transferred. You should check this.

The refund to the employer is legal - not a grey area.

BluE-WinG

Well I can confirm that all my funds can be transferred to another pension vehicle without issue.

I'll transfer them to a new scheme, pay into it for awhile then cancel it. I would imagine what would happen then is that I would have eg. 9000 units of BOI finds from my prior scheme. This would transfer into 9000 units of NEW ARK Life funds. I'd pay into the scheme, perhaps get it up to 10000 units, then cancel it. They would tax that lump at 20% and give me whats left as the finds no longer have anything to do with my prior employer, unless someone tells me otherwise?

ferga_com

You will only be permitted to transfer to a Buy Out Bond, PRSA (in certain circumstances) or another Occupational Pension Scheme ("company scheme").

If you avail of any of these options, you will not be permitted to cancel it afterwards and take a refund.

BluE-WinG

ferga_com wrote: »

You will only be permitted to transfer to a Buy Out Bond, PRSA (in certain circumstances) or another Occupational Pension Scheme ("company scheme").

If you avail of any of these options, you will not be permitted to cancel it afterwards and take a refund.

Well I cant say that thats entirely true as I had another scheme with my former employer that I transferred to this new scheme. When I spoke to the current provider they stated I could cancel it and receive money back bar the companies contributions (including the previous transfer cheque).

I take it theres no website out there explaining this is there?

ferga_com

BluE-WinG wrote: »

Well I cant say that thats entirely true as I had another scheme with my former employer that I transferred to this new scheme. When I spoke to the current provider they stated I could cancel it and receive money back bar the companies contributions (including the previous transfer cheque).

No matter what type of scheme you transfer into, you will NOT be able to access your employer's contributions prior to retirement. You may be able to access your own, but only if the cumulative service in all transferred schemes is less than 2 years.

If you transfer to a PRSA no refunds are available prior to retirement.

The pensions manual can be accessed on the Revenue website.

broker2008

As stated if you have less than 2 years service, one of the options would be to get refund of own contributions less 25% tax. There are instances where you can get refunds under PRSA but otherwise as stated you'll never get near to the money until you reach retirement age or retire due to ill health.

Duffers11

Hi, Dont know if anyone can help me. I started a pension back in March and am making a small contribution of €8 per week. I started this through my current employer and as far as I am aware they are also contributing. I now want to cancel as I feel it is a waste and would rather begin long term savings through a bank for example. I was told by the broker Accuro who are acting with Irish Life that I cannot have any of my contributions back and that the money that is there cannot be touched till I am at retirement age, 65 or whatever it is. Personally I do not trust these schemes and would rather opt out now, but cant seem to do so. I am not leaving my employment, its just that I want to cancel.

Any advice anyone please???
Thanks

amdublin

You cannot withdraw funds from a pension before the age of 65 (unless in special circumstances over 50).

You can of course make it paid up, leave the fund invested and start any new saving plan with any bank.

Why would you not want to continue to invest in your pension plan??
A bank savings plan will probably not accumulate enough for retirement as compared to a properly invested pension fund.

pprendeville

Just want to find out if it's possible to cancel a pension due to unforeseen/outstanding circumstances. I started mine in 2008 and was made unemployed in early 2009. Went back to college in Sept and might have to pay tuition fees of close to €2000. Seeing as this would put me under the kosh bigtime I think the only alternative is to go for the pension if this is possible. Any advice as I am fairly ignorant of rules and regs to do with pensions.

Drumpot

pprendeville wrote: »

Just want to find out if it's possible to cancel a pension due to unforeseen/outstanding circumstances. I started mine in 2008 and was made unemployed in early 2009. Went back to college in Sept and might have to pay tuition fees of close to €2000. Seeing as this would put me under the kosh bigtime I think the only alternative is to go for the pension if this is possible. Any advice as I am fairly ignorant of rules and regs to do with pensions.

If it was an occupational Pension plan (done through a company pension plan) and it has less then two years payments, you might be entitled to a refund of contributions (subject to tax). You should contact the Pension provider, but in most cases you cannot get access to the funds unless you are age 60 (50 in some cases) or unless you need to retire due to ill health or early retirement.

Either way you have nothing to lose by going into the Pension provider and asking, I just wouldnt advise that you get your hopes up.