• Did you leave a previous employment where you had a pension entitlement?
• Do you know how much it is worth or what it is invested in?
• Do you know how much is deducted in charges?
• Do you know who has responsibility for the stewardship of your pension?
• Can you make fund switches with ease and speed if you need to?

If you have a defined contribution pension entitlement from a previous employment it usually makes sense to move it into what is known as a Personal Retirement Bond, also known as a Buy-Out Bond.

If left in your previous employers scheme any amendments you wish to make to your pension must be signed off by the Trustees. This can take considerable time. Some companies who administer company pensions impose their own rules such as restricting fund switches to certain times of the month. Some companies have a lock in period during which no fund switches can be performed while they are administering the encashment of units in order to meet the pension levy deduction.

We recently spoke to a client whose previous employer had gone into liquidation. It took almost a year to transfer her pension out to a Personal Retirement Bond in her own name. During this time she had no information on her pension and no ability to switch funds.

We have assisted a large number of people in moving their entitlements into a bond under their own control in recent times.

Advantages of Personal Retirement Bonds

• There is generally better information on fund value and performance
• There is more visibility on charges and you can choose which company you wish to place your bond with based on their charges and / or investment performance
• There is generally a better choice of funds available to invest in than when held in a company pension scheme
• The bond is owned and controlled by you
• Fund switches are quick and easy

A Personal Retirement Bond operates in a similar fashion to a pension except that your existing fund is all that transfers into it. You don’t make monthly contributions to a Personal Retirement Bond. Investment returns accumulate tax free within the bond and you can choose the funds which you would like it invested in.

You can take benefits from a Personal Retirement Bond from age 50. It is not necessary to retire to take benefits, you can take them even if you are still working with a different employer.

In the event of the death of a Personal Retirement Bond holder, the value of the bond is payable to the deceased’s estate.

If you would like to discuss options for your retirement planning, contact the writer on 086 606 5008, by using the contact form below, or by email to eoghan@obn.ie.

Warning: The value of your investment may go down as well as up.

Warning: If you invest in this product you may lose some or all of the money you invest.

Comments in this blog are general in nature and should not be taken as financial advice as no assessment has been undertaken in relation to your financial situation or objectives.