UK Pensions
Have you worked in the UK at some stage of your career? If so the chances are you have a pension fund and entitlements sitting in the UK that you know little or nothing about. Did you know you can transfer it to Ireland and have complete control over it?
What are the Benefits?
By transferring your pension fund to Ireland not only do you gain control over your funds but you may also gain on the exchange rate side depending on what the sterling – euro exchange rate is.
Your UK pension plan will be one of two types:
Defined Contribution Plan - benefits are determined by reference to contributions paid into the scheme and the investment return on those contributions.
Defined Benefit Plan - the scheme members are entitled to a particular level of benefit depending on their length of service and their salary. It is the pension benefit which is defined and it is then necessary to ensure that the contributions from both the employer and the employee are sufficient to provide that benefit.
When you are deciding whether you should transfer your funds you need to weigh up the advantages and disadvantages depending on the type of plan. A Defined Benefit Plan gives you a defined benefit at retirement which you would be giving up on transfer; however, you would be in direct control of your fund and where it is invested. There are a number of options open to you on transferring depending on the type of plan the funds are coming from. You can transfer your funds into your company pension plan (if the company is authorised to accept the transfer). Alternatively you can transfer the fund into a Buy out Bond or a Personal Retirement Bond. The plan that is accepting the transfer must be approved as a QROPS (Qualifying Recognised Overseas Pension Schemes) by the Revenue.
What is a Buy Out Bond?
A Buy out Bond is a pension scheme in your own name, very similar to the PRSA model.
There are several advantages, the main ones being:
- The policy is issued in your name and belongs to you. Your previous employer and the pension trustees have no further involvement
- You can choose when you take your benefits. This can be any time from the earliest date retirement was allowed under your company pension (normally age 50). You could choose to take the benefits as late as age 70 if you were still working to that age
- You choose the fund in which your money is invested
