Defined contribution scheme REDUNDANCY, advice pls

Proxima Centauri

Hi,

I am currently going through a redundancy procedure at present.

I have a defined contribution scheme with Irish life through my employer, I called them today to ask about getting this pension as a lump sum as I may be emigrating.

The lady advised that the pension can only be moved into a bond or a lump sum be taking at age 50. I'm 33 at the moment and this money could help me starting a new life.

Anybody know if this is correct??
Any advice appreciated!

Thanks

3DataModem

Yes she is correct. You can't "encash" a pension, particularly after two or more years.

coylemj

Talk to your local tax office and discuss it with them, they may allow you to withdraw the money but there will definitely be a clawback as the money was invested free of PAYE and PRSI.

As you are under 50 the financial institution will only facilitate the transfer of the money to a PRSA or a new employer's revenue approved AVC or DC scheme so you need to talk to the tax man, outline your situation and see what they say.

bailes

you may be able to access it but it's unlikely, if you have worked for your employer for less than 2 years it's easier to access but given that you say it's a lump sum to start with abroad i am assuming you were with them for longer than 2 years.

failing that you should talk toyour local tax office as they may be able to assist you with access to the fund however you will be taxed on any withdrawal as you got a tax break on the contributions. not certain about being able to get your hands on your employers contribution (if any).

apart from that your option is to transfer the pension fund from your employers scheme into

1. a personal PRSA
2. your new employers DC scheme
3. a buy out bond under your control

Which option is best for you would be determined by the amount involved, the existing scheme arrangements and prformance and if you are going to be employed in Ireland.

Either way proxima, i hop you get sorted and don't become another statistic using terminal 2 with a 1 way ticket!!

Kennie1

Hi

Having worked in this area as a specialist for the last number of years I have never heard of Revenue allowing a refund of contributions where the member was part of the scheme for more than 2 years...Have ye first hand experiance of this and if so would you mind posting or pm the details of how long the member was in the scheme that got the refund as I would be very interested in this as I have a case that has 29 months mambership?

Proxima Centauri

hey, thanks for the replies.

I've had the plan for just over 8 years.

What are the implications of moving this to a bond under my control?? Would this allow access to the money before I'm 50. Apologies for the lack of knowledge, just looking for info before going to an adviser.

Thanks again.

bailes

my understanding of the options any member of a DC scheme has on leaving service would be the usual options except and as per the pensions board booklet on options it says.

' if you leave your job with less than two years' qualifying service, you may have to take a refund of the value of your own contributions less tax at the basic rate.'

it will be governed by the rules of the scheme. the trouble is that if the Trustees of the scheme are also employee's they rarely understand the rules and in all cases you are better off talking to an independent advisor or contact the pensions board 01 6131900

29 months Kennie1 i don't think it will work unless the contributions were single premium and if so you could try and get the trustees to take a viewpoint if the scheme allows it.

hope this helps

bailes

Proxima Centauri wrote: »

hey, thanks for the replies.

I've had the plan for just over 8 years.

What are the implications of moving this to a bond under my control?? Would this allow access to the money before I'm 50. Apologies for the lack of knowledge, just looking for info before going to an adviser.

Thanks again.

If you are 33 now it is unlikely that you will be able to access the money before you are 50. depending on the rules of the scheme

The benfit of having a bond would be that you choose the investment strategy and you choose the pension provider.

I don't see any way of you being able to convert this to cash any time soon.

Kennie1

bailes wrote: »

failing that you should talk toyour local tax office as they may be able to assist you with access to the fund however you will be taxed on any withdrawal as you got a tax break on the contributions. not certain about being able to get your hands on your employers contribution (if any).

Hi bailes

I asked the question because both your and coylemj posts seemed to suggest that Revenue may consider allowing the trustees to give a refund of employee contributions for members with over 2 years service, I assumed this based on the fact that IL had already told Proxima that he/she could only move to a BOB and I assumed that the Lump sum he/she referred to was related to a Single Premium PRSA. I had a case last year where the member had 25 months membership (not 29 as per my previous post, just checked!) and when queried for a refund was refused point blank, this is why I was so interested!

Thanks for the reply and sorry for my assumptions;)

bailes

Kennie1 wrote: »

Hi bailes

I asked the question because both your and coylemj posts seemed to suggest that Revenue may consider allowing the trustees to give a refund of employee contributions for members with over 2 years service, I assumed this based on the fact that IL had already told Proxima that he/she could only move to a BOB and I assumed that the Lump sum he/she referred to was related to a Single Premium PRSA. I had a case last year where the member had 25 months membership (not 29 as per my previous post, just checked!) and when queried for a refund was refused point blank, this is why I was so interested!

Thanks for the reply and sorry for my assumptions;)

Kennie1

No worries at all,

Who said no to you on the 25 month punter, the Trustees? The Revenue? The Pension Board?

It's worth a bit of persistence, the issue is there is a difference between membership and qualifying service... have a quick look at the file again and see who said no, i would consider going further with it unless you have already trf to a BOB

Kennie1

It was the trustees that was tiding up their membership and were trying to get these small cases off their books, tried pensions board first and then tried Revenue on their direction but to no avail. There not for moving on this one their attuite was if we give it for 25 months the people with 26 months would be looking for it and so on. Think they should put a monetary value on it rather than just a time limit as they are thousands of members being fleased by high % charges in relation to their actually value when you include pension board charge and policy fee's for insured schemes.

coylemj

I had some money in an AVC which was allied to my company's pension scheme, I recall that when we were signing up for the AVC that we were told that in certain cases the revenue might allow someone to withdraw the money before the normal retirement age. I think the way it was worded was that in cases of hardship they would allow the money to be released but you'd still be liable for the clawback.

Kennie1

coylemj wrote: »

I had some money in an AVC which was allied to my company's pension scheme, I recall that when we were signing up for the AVC that we were told that in certain cases the revenue might allow someone to withdraw the money before the normal retirement age. I think the way it was worded was that in cases of hardship they would allow the money to be released but you'd still be liable for the clawback.

You were advised wrong, AVC's can only be drawn upon when drawing down the main scheme benefits. That being said Revenue will allow draw down if the member is critically or terminally ill.

coylemj

Kennie1 wrote: »

You were advised wrong, AVC's can only be drawn upon when drawing down the main scheme benefits. That being said Revenue will allow draw down if the member is critically or terminally ill.

So first you say you can't, then you admit there there can be exceptions, that's why I'm telling the OP to talk to his local taxman, what has he got to lose? He's being laid off with no immediate prospect of a job, are you saying there is 100% no point in asking?

If he is emigrating and if the revenue can get their tax back then everyone is a winner if they release the money!

Kennie1

coylemj wrote: »

So first you say you can't, then you admit there there can be exceptions, that's why I'm telling the OP to talk to his local taxman, what has he got to lose? He's being laid off with no immediate prospect of a job, are you saying there is 100% no point in asking?

If he is emigrating and if the revenue can get their tax back then everyone is a winner if they release the money!

Aren't we very particular today:rolleyes: I am telling you 100% that the OP is waisting their time even picking up the phone.

bailes

If we are the same as the UK, they havea process called QROPS, where if you are declared a non resident for more than 5 years you can access the funds TAX FREE. DC scheme only... never had to look into it for non res irish pension holder.... but now that i think of it i should.

If the Limeys can do it there must some sort of EU legislation

must dig out more info on it

amdublin

Op in your particular scenario, no you will not be able to access your money now.

A pension is a savings plan for retirement. Period.

It is not a savings plan "possibly for retirement but if I need a lump sum before that I can access"