Thursday 23 November 2017

Question of Finance: Is PRSA best way to combine several pensions?

QI am 56 years of age and have been offered, and accepted, voluntary redundancy from my employer.

I was a member of a defined contribution scheme for 12 years and I have been told that I can transfer my pension fund to a PRSA (Personal Retirement Savings Account).

I hope that my redundancy package, some investment income that I have, and some part-time work will allow me to maintain my lifestyle until I reach 60 or so.

However, I am not entirely sure what this entails and whether or not it would be of benefit to me.

I also have an old personal pension from 30 years ago that I would like to amalgamate with my work pension.

Could you advise me please?

A Yes, you are correct that the PRSA route is one option available to you. But it is important that you take expert advice before making any decisions. After all, your future financial security depends on your pension.

The flexibility of a PRSA may well suit your needs, so it is definitely worth considering. It will allow you to combine your work and personal pensions.

It is also possible for you to continue to contribute to your PRSA, and your employer in the potential part-time employment you refer to can also make contributions.

To transfer your fund you will need a certificate of benefit comparison, which can be costly unless the scheme is being wound up.

As it is a PRSA, you will be eligible to take 25pc of your PRSA fund tax free when you retire (or at age 60) and transfer the balance to an ARF (Approved Retirement Fund), which allows you to draw an income.

Alternatively, you can purchase an annuity with the remaining 75pc of your fund.

Sean McLoughlin is director of the Independent Trustee Company.

Irish Independent

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