pension authority website

thebourke

anybody know how this is worked out?
projected pension fund value at retirement 427,725 euro
this buys you a pension of 15,339euro per year..

coylemj

The conversion from the capital sum of x to an annual income of y is based on (1) your age at retirement and (2) the prevailing annuity rates. Which in turn are based on the current rate available from long-dated Govt. bonds.

You hand over a lump sum to an insurance company and they agree to pay you a set amount of money for the rest of your life, this is called an annuity. You get the maximum annual income if you accept a flat amount (no annual increases), no minimum period (in case you die the next day) and no survivor/widow's pension.

thebourke

if you want to get the full 427k on retirement..how does that work
i know you get 25 percent tax free...what about the other 75 percent what do they charge that at?

coylemj

You'd pay the top rate of PAYE and USC and your current rate of PRSI. Which means you'd hand more than half the money to the taxman.

Henry Ford III

Ultra low interest rates means very expensive annuity rates.

thebourke

which is better take 25 percent tax free or take the annuity?

Henry Ford III

thebourke wrote: »

which is better take 25 percent tax free or take the annuity?

Depends on your circumstances and health.

thebourke

so if you were healthy at 65...no financial worries..which would be better

Nijmegen

You can always do both. An annuity is an insurance product you're free to purchase. Plenty of people do things like: Start with an ARF and a drawdown of their tax free lump sum (€107k off that fund above) and later purchase an annuity; purchase an annuity for a set min amount and draw down from the remainder of the fund as normal... Really you should sit down with a pension adviser and look at your options. They're gonna tell you scenarios of people they've worked with that you've never even considered to help guide you.

Henry Ford III

thebourke wrote: »

so if you were healthy at 65...no financial worries..which would be better

Married? Do you have kids? All these factors should be considered.

ARF route might be better, and equally might not.