Q. At the age of 41, I start a new job early next month. I was over 20 years with the last employer – a tech company – and have about € 170,000 saved in my pension. I can either leave it there, take it to my next employment or leave it as a stand alone paid up pension. Am not sure what’s best for me. Can you please advise. Column’s great – Seamus, Clontarf Dublin 3
A. Well done Seamus on the pension – it’s a good start. More than half the working population of Ireland have made no provision for their retirement and think the government will have enough money to fund their State Pension when they retire. They need to think again. With your pension fund, the tech company may not be in business when you retire plus to have greater control over those funds, rather than transfer to your new company’s pension fund, you would certainly be better off transferring it to a Buy Out Bond (or Personal Retirement Bond – PRB) for these 4 reasons :
- The policy is issued in your name and belongs to you. Your previous employer and the pension Trustees have no further involvement. You are in control.
- You can choose the fund in which your money is invested and monitor same.
- You can also choose when you take your benefits. This can be from age 50 rather than the retirement date allowed under your company pension (normally age 65 ) while you can still remain in your new employment. You can choose to take the benefits as late as age 75 if you are still working at that age.
- Your PRB is invested in a fund that is exempt from tax on its investment income, and capital gains tax, so that you gain from all the growth and income that your fund continues to earn.
Your options when you retire are another day’s work. Start with the PRB – makes sense. You can also elect to invest up to 25% of your net relevant earnings each year – 30% at age 50, 35% at age 55 and 40% at age 60. Email me for more information.