When leaving employment, understanding your personal pension options is essential. You will receive ‘leaving service options’ from your previous employer. Depending on your length of service and pension scheme type, these options may include retaining benefits, transferring to a new scheme, or choosing a Personal Retirement Bond (PRB). Exploring all available pension options helps you make informed decisions and secure your financial future

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Leaving Service Options Statement

When you leave your job, you are entitled to receive a leaving service options statement from your pension scheme administrators. This document outlines what you can and cannot do with your accumulated pension benefits. Typically, you may have to wait up to six months after leaving service to receive this statement.

With your consent, we can act as your financial planner to organise this document more quickly, often well before the six-month mark. The pension administrator may try to retain ownership of your pension monies longer than is necessary.

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More Than Two Years’ Pensionable Service

If you have more than two years’ service, you are not entitled to a refund of contributions. Instead, you have the option to:

• Retain your benefits with the existing pension scheme, or

• Transfer your benefits to:

  1. A new employer’s Occupational Pension Scheme, or

  2. A Personal Retirement Bond (PRB).

Transfer to a PRSA

Depending on your situation, you may also be eligible to transfer your pension to a Personal Retirement Savings Account (PRSA). This option is generally limited to those with less than 15 years of pensionable service with the employer.

If your pension’s value exceeds €10,000, you will need to pay for a Certificate of Comparison which details the advantages and disadvantages of transferring to a PRSA. The cost for this certificate typically ranges from €500 to €2,000 depending on circumstances. Note that a Certificate of Comparison is not required if the pension scheme is winding up.

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Defined Benefit Schemes

If you choose not to take a refund of contributions, you retain the right to a pension payable at your normal retirement age. Generally, your entitlement depends on:

• Your total years of service, and

• Your final salary with the employer.

After leaving, your pension entitlement will increase annually to account for inflation, capped at 4% per year.

If you decide to transfer your benefits elsewhere, the pension scheme must provide you with a transfer value. This reflects the present-day value of your future pension benefits if the scheme is solvent.

However, if the scheme is insolvent, trustees may reduce your transfer value proportionally based on the degree of insolvency.

Why You Might Retain Your Defined Benefit Pension

There are several reasons why retaining your entitlement from a defined benefit pension scheme may make more sense than transferring out:

• Defined benefit schemes offer more certainty since retirement benefits are not affected by fluctuating fund values.

• If the scheme is insolvent, it may be wiser to wait for solvency improvements rather than accepting a reduced transfer value.

Note: If you choose to retain your benefits, there is no guarantee that your existing entitlements will be maintained.

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Defined Contribution Schemes

If you are not eligible for a refund and leave your pension where it is, your benefits at retirement will be based on:

• Contributions you and your employer made up to your leaving date,

• Investment gains or losses up to when you take your benefits,

• The age at which you retire, and

• Annuity rates when you purchase guaranteed income for life (if applicable).

The last two factors only apply if you buy an annuity at retirement.

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Transfer Options

You may also choose to transfer your pension benefits to a new occupational pension scheme or a Personal Retirement Bond.

When deciding whether to transfer, consider:

• Retirement benefit drawdown age, which is age 50 in a PRB.

• Whether the charges would be lower if you leave your pension where it is.

• Whether you want to invest in funds unavailable in your previous employer’s scheme or are satisfied with their fund selection.

• Whether you would prefer to combine your old and new pension schemes OR split benefits to stagger retirement benefits.

Contact us for personalised pension planning.

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