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pension. what to do

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  • 01-06-2014 8:25pm
    #1
    logie110
    Registered Users Posts: 57 ✭✭


    Hi
    After 22 years I took voluntary redundancy.
    On my letter it states I have two options, option 1 is a pension of normal retirement date of €7000 Euro per annum and option 2 is transfer of benefit with transfer value of €33,000 Euro.

    What does these options mean?
    I am 42 year old female with young family and my partner working in the UK and prospect of Me returning to work anytime soon is highly unlikely.

    Any ideas?

    Cheers


Comments

  • Options
    #2
    Browney7
    Registered Users Posts: 3,100 ✭✭✭Browney7


    I'm assuming your scheme is a defined benefit plan?

    Any indication as to the solvency position of the scheme? Are you entitled to a tax free lump sum on retirement aswell as the 7k per annum. To generate a pension of 7K per annum you'd need a fund of greater than 140,000 to buy a payment of 7K per annum so your 33K would need to grow by 6.5% a year to generate a fund like that.


  • Options
    #3
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    OP, if there is an option of a pension for a set amount of money per annum then you have a defined benefit pension so you should under no circumstances convert it to a capital sum which you would need to lodge in a personal pension scheme where you would probably incur high charges and you'd end up in a situation where it would be next nigh impossible to purchase an annuity of 7,000 p.a. In most cases the lump sum that people are offered is bad value for money, it's decided by the scheme actuaries and it's almost always the case that the lump sum they offer will not buy the benefit that you are trading in so just don't do it.

    You can't touch the money anyway until you reach retirement age so you might as well leave it where it is.


  • Options
    #4
    ANXIOUS
    Registered Users Posts: 3,095 ✭✭✭ANXIOUS


    I'd be interested in the solvency levels of that scheme. It appears quite low, did they state that on your options?


  • Options
    #5
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    Unfortunately I also got a choice when I left employment with a large Financial Institution and the advice I got at the time was to stick with the deferred pension..... last year a decision was made to wind up the Scheme so am waiting to find to how much I will get.. most definitely won't be anything near the €1100 pm I was due to get as a deferred pensioner or anything near the lump sum I was originally offered. My advice would be to speak to the trustee's to see how well funded the pension scheme is as I think quite a lot of deferred pension schemes are in trouble. I also thought you could opt to retire your pension at age 50.

    coylemj wrote: »
    OP, if there is an option of a pension for a set amount of money per annum then you have a defined benefit pension so you should under no circumstances convert it to a capital sum which you would need to lodge in a personal pension scheme where you would probably incur high charges and you'd end up in a situation where it would be next nigh impossible to purchase an annuity of 7,000 p.a. In most cases the lump sum that people are offered is bad value for money, it's decided by the scheme actuaries and it's almost always the case that the lump sum they offer will not buy the benefit that you are trading in so just don't do it.

    You can't touch the money anyway until you reach retirement age so you might as well leave it where it is.


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