Pension Transfer Ireland – Your Definitive Guide

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Pension Transfer
Pension Transfer

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 Saving Account (PRSA), or Personal Retirement Bond (PRB), this is usually prompted by the need to get lower and more transparent charges, with more investment choice, or in the case of an EPP, where the new Master Trust option is presented, due to a change in pensions law.

In all cases, certain pension transfer rules apply in Ireland, in terms of what type of pensions can be transferred from one arrangement to another. Pension plan charges and investment fund choice can also vary considerably, so it’s hugely important to take the time to ensure that you get the best advice, before undertaking any kind of 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, 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 (thanks 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 hiring 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 10K, 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 3 then, what’s key is choosing the right advisor.

  1. 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.
  2. Although it may sound obvious, ensure that they can provide impartial advice, in that they hold agencies with a broad selection of pension plan providers.
  3. Not all pension transfer solutions are equal, you may find a well-qualified and experienced financial broker offering you the right provider solution, with the funds set to suit your circumstances, but the charges are excessive.

Pension Transfer Solution Charges

Seeking real value is imperative when conducting a pension transfer of any kind, and where you are getting all the detail, with a lack of transparency on charges be concerned.

As with all pension plan types, the underlying charges will eat into your investment growth, diminishing your eventual pension pot come retirement.

Pension advisors can manipulate pension plan charges, to pay them more in 2 ways:

  1. By not granting 100% investment allocation on the transfer.
  2. By adding their excess charges, to the underlying annual investment 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.

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