Specialist
There are a lot of different pension plans available, which largely do the same thing i.e. a savings mechanism for retirement. One difference with the various pension plans is when you can mature your pension. Different rules apply to different pensions, so it is important that you are aware of these differences...
Personal Pension Plans
Benefits can be taken from age 60 up to age 75. You do not have to stop working if you draw down the benefits. In fact, you may mature one plan, take the tax-free lump sum and start another the next day.
For some occupations, the Revenue will allow you to cash in a personal pension early with prior approval but not before age 50.
PRSAs
PRSA’s can be accessed from age 50 if it is one that your employer has contributed to. If it is one that you have always contributed to personally, you cannot mature it until you are age 60.
Occupational Pension Schemes
The employer sets the retirement age for occupational pension schemes, which much range from age 60 to 70.
With the trustee’s permission, benefits can be paid from age 50 onwards. Buy Out Bonds are subject to the same rules as the scheme they were transferred from, so you can mature these from age 50 too.
Health Early Retirement
You can mature your pension at any if you have to retire early due to ill health, no matter what kind of pension you have. Medical evidence has to be provided to the life office to show that you are “permanently incapable through infirmity of mind or body to carrying out your own occupation or any occupation of a similar nature for which you are trained or fitted.”
20% Directors
If you hold more than 20% of the voting rights in your company, you can only mature your pension early (from age 50), if you severe all links with the company, including selling your shares in the company. You may sell them to an adult child working in the business but the Revenue will not accept the disposal of shares to a spouse or to minor children. However, the disposal of company shares is not required for company paid PRSAs.
Steven Barrett is the Managing Director of Financial Advisors, Bluewater Financial Planning. He can be contacted at 01 485 3305 or at steven@bluewaterfp.ie