Tuesday 25 October 2016

Deadline looms to get funds out of pension

Published 23/02/2016 | 02:30

Photo: PA
Photo: PA

PEOPLE who want to take money out of their pension fund have been warned that they have until next month.

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The Government introduced the option to take up to 30pc of the funds out of a pension, but limited it to a three-year period.

The option only applies to those with Additional Voluntary Contributions (AVCs) made to their occupational pension scheme or PRSAs (personal retirement savings account).

The deadline for the scheme is March 27 next. Any money withdrawn is taxed at the saver's marginal rate of tax.

New figures from the Department of Finance show that 16,444 people drew down money out of their pension up to last December.

The total taken out of pensions was €152m, but close to €60m of this was paid in tax.

This means that pension savers have taken net drawdowns of €92.6m so far, the department said.

Broker representative body PIBA said the option to withdraw funds was introduced in the wake of the financial crisis for those who need emergency access to funds.

PIBA's Rachel Doyle said: "Those with AVC savings need to be aware that the option will no longer be available after March 27 next."

She said the option of withdrawing 30pc of funds built up in an AVC fund will be relevant for those who may have been taken unaware by the introduction of lending limits for mortgages and find they have to save for a larger deposit than had been anticipated.

However, the amount of money drawn down so far has been way below expectations. In 2014 just short of €26m was withdrawn, with €17m in 2014. Last year there was €13m taken out of AVC schemes by September.

Irish Independent

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