Option 1 – Leave your pension with your previous employer
- By leaving your pension with your previous employer, access to your pension will be restricted to normal retirement age. This is usually between ages of 60-65.
- If you die prior to your normal retirement age, there can often be complications locating the pension, as a result some family members never claim the pension entitlements of the deceased as inheritance.
Option 2 – Transfer your total pension fund value into a bond in your own name
- This option allows you to receive 25% of the total pension value as a tax free lump sum from age 50.
- The remaining 75% can then be invested in two ways;
- invested in another pension vehicle (ARF) and drawn down when needed.
- Used to buy an income for the remainder of your life (Annuity).
The main benefits of this option are as follows
- You get access to this money from age 50 (instead of the normal retirement age of your ex employers scheme, which is usually 60 or 65).
- You have full control over where your pension fund is invested. There is a wide variation of choice here. You can;
- Invest your pension in a standard managed fund of an insurance company of your choice e.g. Aviva, Zurich, Irish Life etc. This can be a low, medium or high risk fund, depending of the level of volatility you are comfortable with,
- Use some or all of your pension money to invest in the stock market
- Invest in a local startup company that has growth potential
- Buy property with your pension fund
- Buy a guaranteed income for the rest of your life
- In the event of your death, your family can have early access to all of the pension money
- As your pension money is now in a bond in your own name, any decisions or rule changes made by your ex employer relating on their pension will have no effect on your pension.
If you would like to find out more information to see where your deferred pension is and how it is performing, the best way is to order as your Financial Advisor to order your ‘Statement of Benefits’ from your previous employer. If you need assistance, we would be more than happy to help.