Pension Question

Mrs B

Does anyone know if you can stop paying into your pension & cash it is,
or do you have to wait until you are at retirement age to recieve your money?

sarahlulu

You can stop paying into your pension at any time. You won't be able to cash it in though until retirement. (Although there are circumstances in which you can have your contributions refunded, if you have been a member of the pension scheme for less than two years.

iMax

Sorry I've nothing to add OP, but I would like to know is it worthwhile having a pension these days ? I've currently suspended mine & am thinking of scrapping it totally.

coffee_cake

iMax wrote: »

Sorry I've nothing to add OP, but I would like to know is it worthwhile having a pension these days ? I've currently suspended mine & am thinking of scrapping it totally.

The tax relief and possible investment returns make it seem that way, yes
Unless you want to live off state pension!

iMax

Well my pension is right now worth less than paid into it, so I'm not too enamoured by the whole thing, plus I've taken a 28% drop in salary & a rising mortgage since I first took it out so the funds aren't there to keep it up the way I'd like to.

hmmm

iMax wrote: »

Well my pension is right now worth less than paid into it,

Don't forget that you would have paid tax on the money if you hadn't paid into a pension.

I know lots of people who have stopped paying into their pension because of salary cuts. Personally I wouldn't do it, but that's because the tax benefits are so good and it's hard to catch up when you're older.

eagle_i

Personal Pensions (including PRSA’s) are flexible in that you can stop and restart contributions at any time. You can also reduce and increase contributions at any time obviously within the contract minimum contribution levels (if any) and the revenue maximum contribution limits. Cashing in your pension is not an option unless you are age 50 or older.

If you are lucky enough to be a member of an employer sponsored pension scheme, you are restricted to the rules of that scheme. You need to check with the adviser/administrators of your employer’s scheme whether there is a standard employee contribution rate, if there is a standard employee contribution rate, the likelihood is you cannot stop/reduce contributions below the standard rate. If you are allowed to stop/reduce contributions, you better check how this affects the contributions your employer pays and it could also affect any Death in Service benefit (aka Life Assurance) and Income Protection benefit (aka salary continuance benefit) that are attached to the scheme.

You have to remember pension planning is a long term strategy, the earlier you start your pension planning the better. Yes the fund value maybe down, perhaps it is worth less than you paid in to date, but if you have 10 years or more to go to retirement it is very likely this value will recover. The way you should look at this is your buying power has increased with the drop in value. If the cost of purchasing 1 unit (share) in a fund was say €1 last year/week/month and that same unit/share is costing €0.50 now, your buying power has doubled cause now you are getting 2 units/shares for your €1 rather 1 for 1.

To stop saving for your pension is a very dramatic thing to do, and very unwise. You need to consider your family in this instance. The question is can you live off the state pension, which is currently €11,975.60p.a (€230.30p.w.) for a single person or a couple it is €19,957.60p.a. (383.80p.w.)/€22,703.20p.a. (€436.60p.w.) subject to your dependant’s age less than 66/over 66 respectively. So if you were 66 today can you keep a reasonable standard of living on that income alone for you and your family? If not, then you have answered the question for yourself – you need to save for a pension to supplement the state pension!

Mrs B

Thanks for your replies....

Jelly2

Could anyone tell me what kind of tax relief you can get if you pay into a private pension please? My partner is paying into a pension on a monthly basis (not through his employer). Can he claim tax relief on this? Does he need to contact the Revenue to do that, or is it factored in by the pension provider?

eagle_i

Jelly2, you get full tax relief on your pension contributions up to the maximum contribution rates set out in the age scale below. Where you are contributing to a personal pension you claim the tax relief at the end of year in which you paid. This is normally done when you make your self assessment tax return prior to 31st October, so lets say you made pension contributions last year (01/01/2009 to 31/12/2009), you need to make your tax return by 31/10/2010 for last year.

You are entitle to full PAYE and PRSI relief. You will need to do it in two steps:
1. Forward the RAC certifciate/PRSA1 form (issued by your pension savings provider) to your inspector of taxes they will refund you the relief based upon your relevant PAYE tax rate (20% or 41%).

2. Forward a copy of the RAC Certificate/PRSA1 form to the PRSI area of the revenue to receive the PRSI relief, which can be an additional 6% approx.

The maximum contributions as a % of earnings are as follows:
Age Under 30: 15%
Age 30 to 39: 20%
Age 40 to 49: 25%
Age 50 to 54: 30%
Age 55 to 59: 35%
Age 60 and over: 40%

Drummerboy2

My company are winding down the pension fund. We are being advised to put whats in our fund into a PRB, and then continue making payments to a PRSA which they will still contribute to.

If an employee is over 50 can they cash in some of their fund? Thanks in advance?

Kennie1

Drummerboy2 wrote: »

My company are winding down the pension fund. We are being advised to put whats in our fund into a PRB, and then continue making payments to a PRSA which they will still contribute to.

If an employee is over 50 can they cash in some of their fund? Thanks in advance?

If you were less than 15 years in the pension scheme you would be able to transfer the fund into a PRSA but you may get more or less of a tax free lump sum when you retire.

Yes you can take some or all of the pension fund tax free once it is an employer scheme this depends on years service. The trustees will have appointed an advisor to explain your options. I have delt with a company recently who had the nerve to send out the emp[loyee's a dvd of what there options were, this did not fulfill there duties so the employee has the right to demand to speek to the advisor directly. Hope this helps.

Kennie1

In relation to PRSI refunds You need a copy of your P60 and you need to know the exact contribution that you made for the year you are claiming for, The correct address for refunds is;

PRSI Refunds Section
Collector-General Division,
Sarsfield House
Limrick
Lo Call 1890 20 30 70

You will need a claim form that can be downloaded from www.welfare.ie I think you can claim for contributions back as far as 2003 although I may stand corrected.