Pensions Advice-Transferring to PRSA

jobseekr1

Joining a company DC scheme, and I have a separate PRSA I have maintained over the years.
-Question is do all DC schemes allow members who contribute during their time in a firm, transfer their pension when they leave the firm to a PRSA privately held?
-What are pros/cons of above? My thinking is I don’t trust DC schemes but I like the idea of contributing if I can transfer to a PRSA which I can control long term.
-In terms of contributing to a DC scheme with the likelihood of transferring it out in the long term to a PRSA, should an employee always try to ‘max it out’ and pay in as much as much of their salary as possible? I keep hearing it is tax efficient etc but I don’t quite get it.

Merowig

Yes you can transfer to a PRSA though usually you need to get a Certificate of Comparison which is very costly!
This speaks against a transfer from your DC scheme to a PRSA.
I would leave it in the DC scheme after leaving the company as a DC scheme is usually much cheaper than a PRSA - I see this as another argument against transferring it.

I assume you will get employer contributions / matching contributions. It makes definitely sense to max these out - you can further max it out in regards to tax.

In regards to tax see
http://www.citizensinformation.ie/en/money_and_tax/personal_finance/pensions/personal_pensions.html
http://www.pensionsauthority.ie/en/LifeCycle/Tax/Tax_relief_on_contributions/
http://www.revenue.ie/en/tax/it/reliefs/pension-contributions.html

jobseekr1

Hi Merowig, Many thanks for the response, sorry for my slow reply! In the event of matching contributions, due to short term in role/pension scheme rules, not being transferable as is appears to be case, I think transfer to PRSA is the best option in order to keep any tax benefits.
In general, if an employee is going to spend their career with several employers with DC schemes what is the advice pension wise? Move them (including employee and employer contribution) to PRSA’s as you go, or ‘claim’ them all separately upon retirement?

Merowig

Perhaps I was not clear I would not transfer them to a PRSA - as stated there is most likely a need for a costly Certificate of Comparison and PRSAs are more expensive than DC schemes.

I would claim them seperately or move the old Occupational Pension scheme to the new Occupatinal Scheme.
As an alternative you can move them to a PRB but PRBs are as well often more expensive than an Occupational Pension scheme.

Henry Ford III

Merowig wrote: »

Perhaps I was not clear I would not transfer them to a PRSA - as stated there is most likely a need for a costly Certificate of Comparison and PRSAs are more expensive than DC schemes.

I would claim them seperately or move the old Occupational Pension scheme to the new Occupatinal Scheme.
As an alternative you can move them to a PRB but PRBs are as well often more expensive than an Occupational Pension scheme.

That's not necessarily the case.

Merowig

Yes there are the odd expensive occupational schemes.

I base my statement on http://www.welfare.ie/en/downloads/pensionchargesireland2012.pdf

Henry Ford III

Merowig wrote: »

Yes there are the odd expensive occupational schemes.

I base my statement on http://www.welfare.ie/en/downloads/pensionchargesireland2012.pdf

Yes but there are also some cheap PRSA's. Making a blanket statement such as you did is incorrect and could be misleading however innocently it was made.

The best choice and best advise depends on a number of issues.

Merowig

The real "cheap" PRSA are mostly only available when you have huge sums available...

Fact is that in general Occupational pension schemes are the cheapest as many employers are covering the administration costs even after leaving the company. The remaining costs for the funds are as well pretty low and often lower than alternatives.

Hani Kosti

Merowig wrote:

Yes you can transfer to a PRSA though usually you need to get a Certificate of Comparison which is very costly! This speaks against a transfer from your DC scheme to a PRSA. I would leave it in the DC scheme after leaving the company as a DC scheme is usually much cheaper than a PRSA - I see this as another argument against transferring it.

COC is only required where the scheme is not winding up and transfer value is over 10k so not a rule of a thumb!!!!
Major things to consider would be investment choice, charging structures and possibly Death in Service under DC.
Transferring into several PRSAs would provide you with an option of retiring them one at a time based on your financial needs.

Henry Ford III

Merowig wrote: »

The real "cheap" PRSA are mostly only available when you have huge sums available...

Fact is that in general Occupational pension schemes are the cheapest as many employers are covering the administration costs even after leaving the company. The remaining costs for the funds are as well pretty low and often lower than alternatives.

That's utter nonsense.

As I said earlier each case needs to be looked at in isolation.

Merowig

http://www.welfare.ie/en/downloads/pensionchargesireland2012.pdf

Findings suggest that occupational pension schemes compare favourably to these benchmarks. The average Irish occupational scheme reduction in yields (in relation to disclosed costs only) identified are 0.52% to 0.91% (Defined Contribution insured schemes of various sizes) and 0.30% ‐ 0.58% (Defined Contribution non‐insured schemes of various sizes) compare favourably to the equivalent reduction in
yields calculated for UK Stakeholder pensions (1% and 1.63%) and the typical charging structure for standard PRSAs (1.27 to 1.57%).

So welfare.ie is posting nonsense?
It is logical that there are the odd expensive occupational pension schemes around. Though this is not the norm.

Henry Ford III

Merowig wrote: »

http://www.welfare.ie/en/downloads/pensionchargesireland2012.pdf



So welfare.ie is posting nonsense?
It is logical that there are the odd expensive occupational pension schemes around. Though this is not the norm.

Average is the key word there. You assertion is unsound.

ANXIOUS

Merowig wrote: »

http://www.welfare.ie/en/downloads/pensionchargesireland2012.pdf



So welfare.ie is posting nonsense?
It is logical that there are the odd expensive occupational pension schemes around. Though this is not the norm.

You can't discuss anything with them, they are so blinkered and seems to post with an incredible feeling of superiority.