Q. I have been made redundant after only 18 years’ service ( now 41 ) but am going straight into similar employment. I leave a pension worth € 274,000 having paid c. € 900 per month since the start. The growth was good ! Can I release any of this money now, do I have to wait til age 65 to claim it and what other options do I have ? Paddy – Rathmines Dublin 6
A. You appear Paddy to have been in an occupational pension scheme and therefore precluded from making any withdrawals now until normal retirement age ( usually age 65 ). If you leave the fund as is with your current employer, it is deemed paid up but should still grow each year which you need to monitor. As long as your now ex-employer remains solvent, at c. 3% growth each year, your € 274,000 fund at 65 may grow to c.€ 500,000+ . You could elect to transfer the € 274,000 to your new employer’s pension scheme if there is one OR you could place the fund in a Buy Out Bond / Personal Retirement Bond – gives you control over your pension and is not dependent on your former employer remaining solvent. Importantly at age 50, you can cash in 25% of the fund then – tax-free, investing the balance in an Approved Retirement Fund (ARF ) where only when you reach age 60, you MUST take 4% annually from this fund … taxable called imputed distribution. This is the best option. Best of luck in the new job.