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New pension

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  • 07-06-2015 5:48pm
    #1
    PokeHerKing
    Registered Users Posts: 4,329 ✭✭✭


    Hi folks,

    I'm hoping to get some free financial advice from anyone with some knowledge on pensions.

    I was made redundant from my previous job of 6 years, where I was paying into a a pension.

    I'm now in my new job and I'm paying into a new pension.

    My previous employer matched my contribution and its the same with my new employer.

    So my 2 options are to leave my old pension where it is as a deffered benefit or transfer it to my new pension.

    Which option should I take?

    Cheers


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  • Options
    #2
    PaulM1977
    Banned (with Prison Access) Posts: 210 ✭✭PaulM1977


    Hi PokeHerKing

    You have 4 options when you change employers, as to what you can do with your paid up pension benefits from your old job. Leave it within your old employers pension plan, transfer to your new employers pension scheme transfer it to a PRSA and keep making contributions in to it or transfer it to a Buy Out Bond(aka Personal Retirement Bond).

    As you have changed employers, you may want to cut all ties with them so it would therefore make sense to transfer away your benefits away from them. In this case there would be no need to leave it in their scheme.

    You may want to keep all your benefits in one so that it may be easier to keep track of how it is performing/accumulating so that when you come to retirement it makes it easier for you to know how much you have saved for when you are no longer working. If so, then your new employers scheme is the best way to go.

    The PRSA option would only be suitable if you didn't have any other pension provisions in place, but as you do through your new employer, this option is a non-runner.

    A Buy Out Bond allows you to transfer your pension benefits by way of a lump sum in to a single plan, which you can no longer make payments in to, which is looked after by you directly, you decide how its invested, which pension provider to choose to invest it with and when you would like to gain access to the benefits(it is possible to draw down the benefits through a Buy Out Bond from age 50, but it will reduce your options when you come to age 65/Normal Retirement Age).

    Also look at the charging structure for the Buy Out Bond option and your new employers pension scheme as this may influence your decision(the lower the charges the better for you)

    I am assuming that the pension plan from your previous employer is a Defined Contribution Scheme and not a Define Benefit one.


    PaulM


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