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Pension Query

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  • 13-01-2014 7:22pm
    #1
    Dan82
    Registered Users Posts: 392 ✭✭


    Not very up to date with pensions but i did hear you could take an amount out of your pension at some stage, i have a defined benefit scheme that is just on ice since i left one job and moved to another,

    Is this one of the type of pensions you can do this with?

    Sorry just really know nothing in this area and better to find out from someone that does.


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    #2
    3DataModem
    Registered Users Posts: 3,997 ✭✭✭3DataModem


    Dan82 wrote: »
    Not very up to date with pensions but i did hear you could take an amount out of your pension at some stage, i have a defined benefit scheme that is just on ice since i left one job and moved to another,

    Is this one of the type of pensions you can do this with?

    Sorry just really know nothing in this area and better to find out from someone that does.

    Unless you have a short life expectancy, taking an early payment from a defined benefit scheme is generally a very bad idea.

    In any case, early payments are generally only available if you are 55 or old (i.e. you "early retire").


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    #3
    Kristopherus
    Registered Users Posts: 11,907 ✭✭✭✭Kristopherus


    Dan82 wrote: »
    Not very up to date with pensions but i did hear you could take an amount out of your pension at some stage, i have a defined benefit scheme that is just on ice since i left one job and moved to another,

    Is this one of the type of pensions you can do this with?

    Sorry just really know nothing in this area and better to find out from someone that does.

    The pension contributions that you paid with your last employer ideally should be transferred to the new employer to maximise your final retirement payout.


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    #4
    Dan82
    Registered Users Posts: 392 ✭✭Dan82


    3DataModem wrote: »
    Unless you have a short life expectancy, taking an early payment from a defined benefit scheme is generally a very bad idea.

    In any case, early payments are generally only available if you are 55 or old (i.e. you "early retire").

    It's not a big payment and my wife wants to start her own business so the money would come in handy, no point having it stuck there when I could be making it into so etching bigger.

    They made pensions amounts I taught available to any age but it was only a certain small percentage?


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    #5
    Dan82
    Registered Users Posts: 392 ✭✭Dan82


    Kristopherus wrote: »
    The pension contributions that you paid with your last employer ideally should be transferred to the new employer to maximise your final retirement payout.

    I totally agree but my wife was hoping to use some funds from it for a new business she wants to start


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    #6
    ANXIOUS
    Registered Users Posts: 3,095 ✭✭✭ANXIOUS


    Dan82 wrote: »
    I totally agree but my wife was hoping to use some funds from it for a new business she wants to start

    I'd say your thinking of the 30% AVC drawdown, which is only applicable if you made Employee Avc's.


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    #7
    Dan82
    Registered Users Posts: 392 ✭✭Dan82


    ANXIOUS wrote: »
    I'd say your thinking of the 30% AVC drawdown, which is only applicable if you made Employee Avc's.

    That must be it, how would i find that out?


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    #8
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    Kristopherus wrote: »
    The pension contributions that you paid with your last employer ideally should be transferred to the new employer to maximise your final retirement payout.

    That is virtually impossible these days since anyone changing employment is highly unlikely to be going to a job with a DB scheme given that the vast majority of them still in existence are closed to new members.

    Even when DB schemes were the norm, it usually wasn't always possible to transfer your service into your new employer's DB scheme since your salary in the new job was typically higher and the new employer wouldn't be prepared to accept money from your old scheme to buy service in his scheme. That's why when Ryanair recently wound up their DB scheme, there was 200 former employees with a preserved benefit - people who left before retirement age and who are still to young to draw their pension, none of them was able to port the Ryanair DB pension to their new employer.

    In many cases, an employee leaving a company with a DB scheme can ask for a transfer amount to take to lodge in the DC scheme of the new employer and the trustees are usually open to this but it's almost always a bad deal (the actuaries of that scheme decide how much to give you) so anyone doing this would need their heads examined.

    You should hang on to any benefits accrued in a DB scheme and just leave them where they are.


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    #9
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    Dan82 wrote: »
    That must be it, how would i find that out?

    IF you paid money into an AVC, it's under the control of the trustees of the pension scheme since Revenue rules require that the two (the DB scheme and the employee AVCs) are run in parallel. That means that you need to talk to the trustees of your former employer's pension scheme if you want to withdraw money from it.

    You can draw out up to 30% of an AVC fund but it will be liable to PAYE and USC at your marginal rates which will potentially wipe out half the money.


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