Pension transfer refers to the process of moving your existing pension fund from where it is currently invested to a new pension arrangement.
For those in group employer pension schemes, pension transfers arise from a career move to a new company, or due to the closure of their existing pension scheme.
Otherwise, for those with Private Pension Plans, in the form of a Personal Pension, Executive Pension, Personal Retirement Savings Account (PRSA), or Personal Retirement Bond (PRB), this is usually prompted by the need to achieve lower and more transparent charges, with more investment choice, or in the case of an EPP, where a Master Trust option is presented due to increased governance requirements under European pension regulations.
In all cases, certain pension transfer rules apply in Ireland in terms of what types of pensions can be transferred from one arrangement to another. Pension plan charges and investment fund choice can also vary considerably, so it is important to take the time to ensure that you receive appropriate advice before undertaking any pension transfer.
Before you even start speaking with a financial advisor, make sure to investigate their professional Pension and Investment qualifications in advance.
Irish Pension Transfer Rules
The transfer rules depend on the pension arrangement you are transferring from and the arrangement to which you are transferring.
Occupational Pension Scheme benefits can be transferred to a PRB, PRSA, Executive Pension Plan, or to another Employer Group Scheme.
Executive Pension Plan benefits can be transferred to another EPP, PRSA, or to a PRB.
Personal Pension Plan benefits can be transferred to the same type of arrangement or to a PRSA.
Personal Retirement Savings Account benefits can be transferred to another PRSA or to an Occupational Pension Scheme.
Personal Retirement Bond benefits can be transferred to another PRB or to an Occupational Pension Scheme.
Most Common Transfer Scenarios
As mentioned already, the most typical pension transfer need arises when someone has left their Employer-Sponsored Occupational Scheme, but more recently, existing Executive Pension Plan (EPP) holders are also considering a move to a Master Trust version of their EPP (due to recent European governance legislation) or to a PRSA.
Here, if considering the PRSA option, it is very important to realise that the PRSA option typically requires the appointment of a nominated actuarial consultant to produce a “Certificate of Benefit Comparison” before the transfer to a PRSA may occur.
A certificate of benefit comparison is also accompanied by a written statement as to why a transfer is or is not in the interest of the member.
Exceptions are only allowed to this requirement where:
(a) The transfer value is less than €10,000, and the member has left service.
(b) The scheme is being wound up.
(c) The transfer only accounts for a refund of the member’s contributions.
(d) The transfer represents the member’s accrued benefits, where the member has less than 2 years pension scheme service and has no other preserved benefits under the Pensions Act 1990.
Note:
From 01 January 2022, you may transfer your occupational pension scheme benefits to Personal Retirement Savings Accounts (PRSAs). The transfer can occur without regard to the length of time you have been a member of the pension scheme.
Pension Transfer Advice
We have authored an additional article to assist you in exiting your employer’s pension scheme.
However, if it is the case that you are seeking fully transparent charges, a broader investment choice, a better overall service, or indeed a combination of all three, then what is key is choosing the right advisor.
Before you even start speaking to one, make sure to investigate or ask them directly about their professional qualifications in the pensions and investment space. Although it may sound obvious, ensure that they can provide impartial advice and have access to a broad selection of pension plan providers.
Not all pension transfer solutions are equal. You may find a well-qualified and experienced financial broker offering you the right provider solution, with funds suited to your circumstances, but the charges may still be excessive.
Pension Transfer Solution Charges
Seeking real value is imperative when conducting a pension transfer of any kind, and where you are not receiving full detail or transparency on charges, this should be a concern.
As with all pension plan types, the underlying charges will eat into your investment growth, reducing your eventual pension pot at retirement.
Pension advisors can increase overall pension costs in two main ways:
- By not granting 100% investment allocation on the transfer.
- By adding their excess charges to the underlying annual management charge.
Pension Transfer Personal Review
If you are interested in finding out more about transferring your pension, contact us for a no-obligation free consultation today.
