When can I access my pension?
You need to be 50 years of age to draw down from an occupational pension, however, this may vary depending on the individual scheme rules and you will need to obtain your employer’s consent.
The age limit also depends on the type of pension policy you hold.
The age limit of 50 also applies to Buy out Bonds.
However, you must be 60 years of age in the case of a PRSA although this is age 50 for an employee leaving service.
Personal Pensions can be accessed at age 60 if you are ceasing employment.
Some professions such as sportspeople can also access their pensions early.
Revenue rules also allow you access to your pension if you are permanently unable to work due to serious illness.
Can I continue to work?
If you are a company director, you are normally required to sell your shares in order to access your pension benefits in Ireland. This is not the case if you transfer your pension benefits overseas.
If you start taking one or more pensions you can continue to work and pay into another pension.
What are my options when I access my pension?
On retiring your pension, you can take up to 25% as a lump sum of which
- The first €200,000 is tax free and;
- The next €300,000 is taxed at 20%
The balance must be allocated as follows:
Either an annuity income providing a guaranteed income of €12,700 pa or
An Approved Retirement Fund (ARF)/Vested PRSA
Note that from age 61 a minimum annual withdrawal of 4% of the value of the fund is imputed. This increases to 5% of the value once you reach the age of 70.
When is it better to leave the pension alone?
If you are in poor health, early access of a defined contribution or money purchase scheme could leave your family in a worse financial position in the event of your death.
This is because death benefits are a 100% return of fund with no income tax and no excess pension charge for funds in excess of the Standard Fund Threshold.
Note that a spouse can inherit an ARF but must pay income tax on the distributions.
Note that this is the opposite advice to someone with a defined benefit or Final Salary pension.
Are there any Social welfare implications from early retirement?
Some social welfare payments are means tested such as the non-contributory state pension and jobseekers allowance.
If you take early retirement, your pension income could result in you failing the means test and having your state benefits reduced.
To discuss any of these questions further, or to ask your own pension related questions, get in touch Schedule a Call
Further Insights on Retirement Planning
Read one of our latest guides:
Retirement Planning for Gen X, Y (millennials) & Z
If you are 55+ and closer to your retirement date, then our Guide to Approaching Retirement is for you