Who can access their pension early?
- Members & Ex members of Occupational Pension Schemes
- Personal Retirement Bond / Buy out Bond holders
3 Ways to access your pension early:
- Early Ill Health
- Death’s Door Concession
- NEW: People aged 50+
Early Ill Health
You may be able to take early retirement on grounds of ill health if you suffer from physical or mental deterioration which is bad enough to prevent you from following your normal employment or which very seriously impairs your earning capacity.
(You should note that a minor decline in energy or ability is not adequate to justify early retirement on the grounds of ill health).
Death’s Door Concession
If your illness is terminal (where life expectancy is measured in months rather than years), Revenue allows your entire occupational pension funds to be drawn down at a concessionary income tax rate of 10%.
The difference between this rate and the rates of income tax, USC and PRSI (up to 55%) is substantial.
NEW: People aged 50+
The Minister for Finance amended the legislation governing Occupational Pension Schemes in Ireland in 2016.
The changes allow more flexibility for retirement options to current and former members of Occupational Pension Schemes.
This means that in most cases you can access your Occupation Pension Scheme from age 50 (depending on scheme rules).
Current and former members are no longer forced to take an annuity at retirement, i.e. an income for life that can die with them.
Instead, they can choose to move their Occupational Pension Scheme benefits into a bond in their own name (called a Personal Retirement Bond or Buy Out Bond), and when they want to retire it, they are eligible to choose the Approved Retirement Fund (ARF) Option.
The ARF option allows the member to take a 25% Tax Free Lump Sum – from age 50.
After taking their tax free lump sum, the balance of funds will continue to be invested (and will hopefully continue to grow) in an Approved Retirement Fund – rather than buying an annuity.
What’s more, on death of the member the remaining funds in either the Personal Retirement Bond / Buy out Bond or Approved Retirement Fund can be left in their estate for their family. It does not die with the member.
What’s the next step?
Before you decide to unlock your pension early, it’s prudent to discuss your individual circumstances with a Qualified Pension Expert. It can be a great option for some people but it’s not suitable for everyone. We have a team of Retirement Planning Advisors (RPA) & Certified Financial Planners (CFP) who can crunch the numbers for you.
We will be happy to contact your pension provider if you wish and arrange the relevant information you need free of charge.