What should I do with my pension?

CyberGhost

I started working for a company about a year ago where having a pension was mandatory. But I left about 9 months after.

The pension was provided by Allied Pension Trustees.

I have accumulated about 750 euro (after tax), so upon leaving I got a letter giving me options on what to do with my pension.

I could transfer it or get a refund.

I can't avail of the pension in my new job for 6 months. And to be honest, I'm thinking I don't really need a pension. I might emigrate, and I'm pretty good as saving myself. Plus the fact that I can't claim the money for decades is just something I don't like.

So I was going to get a refund. But then I started thinking, what if I get a job in the future where the pension will be mandatory, again. I would have lost the previous contributions by the company.

So right now I don't know whether:

1. I should keep the pension?

Can I "freeze" (dormant) the pension by not contributing to it unless required by the company?

How long can I keep my money with APT?

2. Get a refund.

Liam D Ferguson

If you take the refund option, you lose the value of the employer's contributions. But it's possible that you may lose them no matter what option you choose. Are there any options available to you involving transferring the money and keeping the value of the employer contributions. You'd see them on the options letter because the transfer value would be greater than €750.

CyberGhost

Thanks for the reply, Liam.

Losing the value of the employer's contributions is why I haven't still made up my mind.

Here are the options available to me... what do you think?

homer911

I'm pretty sure that if you leave a pension within 2 years of joining, you lose the employer contributions automatically, regardless of how long you leave the rest there. (unless you transfer in your pension from a previous employment in that time)


It is never to early to start a pension, but €750 is not a lot to leave in one fund. Consider the option of getting a refund, then as soon as you qualify to join the new scheme, put a lump sum of the equivalent into the new scheme to kick start your contributions

Liam D Ferguson

homer911 wrote: »

I'm pretty sure that if you leave a pension within 2 years of joining, you lose the employer contributions automatically, regardless of how long you leave the rest there. (unless you transfer in your pension from a previous employment in that time)

That depends on the rules of the scheme. In all cases, taking the refund triggers a refund of employer contributions. But if the rules of the scheme allow, taking a transfer value into something else can include the employer contributions.

Liam D Ferguson

CyberGhost wrote: »

Thanks for the reply, Liam.

Losing the value of the employer's contributions is why I haven't still made up my mind.

Here are the options available to me... what do you think?

What's the accumulated fund on Options 1, 2 or 3? Not shown on the letter.

CyberGhost

Liam D Ferguson wrote: »

What's the accumulated fund on Options 1, 2 or 3? Not shown on the letter.

The accumulated fund is my 750 + employer's 2K together.

That's why I am a bit hesitant, because if I refund, I lose that 2K.

I would not mind, IF it meant that I never needed to have a pension; BUT, if in the future a company I start working for has a mandatory pension policy, then I would start from scratch again.

I would preferably keep the 750 + 2K dormant in an account, never contributing it and keeping it as a "if I ever must set up a pension, fine, then just add to this".

I'm not sure a company would let me do that though. I'll have to call them up and ask.

Liam D Ferguson

CyberGhost wrote: »

The accumulated fund is my 750 + employer's 2K together.

That's why I am a bit hesitant, because if I refund, I lose that 2K.

I would not mind, IF it meant that I never needed to have a pension; BUT, if in the future a company I start working for has a mandatory pension policy, then I would start from scratch again.

I would preferably keep the 750 + 2K dormant in an account, never contributing it and keeping it as a "if I ever must set up a pension, fine, then just add to this".

I'm not sure a company would let me do that though. I'll have to call them up and ask.

If you join your new employer's pension scheme in 6 months' time, you can transfer the €2,000 into it. But be aware that doing so adds up your service for the purpose of the "two year refund" rule. (The refund option is not available if you leave after 2 years. You did 9 months with the first employer. If you transfer your €2,000 into the second employer's pension scheme, then the refund option disappears after 15 months with the second employer.)

You can transfer your €2,000 into a Buy-Out Bond or Personal Retirement Savings Account (PRSA) of your own choosing. I'm not aware of any Buy-Out Bond that will accept <€3,000.

I think you should choose between putting your €2,000 into your current employer's scheme after 6 months or into a PRSA. It seems a shame to lose the employer's contributions and be taxed for the refund option.

testicles

This post has been deleted.

Liam D Ferguson

testicles wrote: »

This post has been deleted.

I'd contact the former employer first. Ask for a Leaving Service Options letter.

CyberGhost

Liam D Ferguson wrote: »

If you join your new employer's pension scheme in 6 months' time, you can transfer the €2,000 into it. But be aware that doing so adds up your service for the purpose of the "two year refund" rule. (The refund option is not available if you leave after 2 years. You did 9 months with the first employer. If you transfer your €2,000 into the second employer's pension scheme, then the refund option disappears after 15 months with the second employer.)

You can transfer your €2,000 into a Buy-Out Bond or Personal Retirement Savings Account (PRSA) of your own choosing. I'm not aware of any Buy-Out Bond that will accept <€3,000.

I think you should choose between putting your €2,000 into your current employer's scheme after 6 months or into a PRSA. It seems a shame to lose the employer's contributions and be taxed for the refund option.

Thank you, Liam!

I talked with Allied Pension Trustees.

And the person explained that since I was with my previous employer only 9 months, I would only be able to transfer my contributions, but not my employer's. So I would be losing my employer's contributions regardless.

In the end I just opted for a refund, since I cannot keep the 2 grand or transfer it.

The J Stands for Jay

CyberGhost wrote: »

Thank you, Liam!

I talked with Allied Pension Trustees.

And the person explained that since I was with my previous employer only 9 months, I would only be able to transfer my contributions, but not my employer's. So I would be losing my employer's contributions regardless.

In the end I just opted for a refund, since I cannot keep the 2 grand or transfer it.

Someone can correct me on this if it's wrong, but since you're losing the employer part I think getting the refund, then paying it as an avc into the new scheme will leave you better off from a tax point of view.

ANXIOUS

McGaggs wrote: »

Someone can correct me on this if it's wrong, but since you're losing the employer part I think getting the refund, then paying it as an avc into the new scheme will leave you better off from a tax point of view.

Correct if you are a higher rate tax payer. Have seen something similar done when people are coming up to retirement and take a short term contract, put in max contributions get relief at the higher rate up to €115k and take it back with less than two years service at 20%.