Where an individual is leaving the services of their employment and elects to take a transfer value from the pension scheme, the transfer value may in certain circumstance be:
- paid into a buy out bond with a life company. A buy out bond is like a single premium pension plan in the individual’s own name, which can only be used to provide retirement benefits, subject to same restrictions as would apply under a retirement benefit scheme.
- transferred into another approved retirement benefit scheme with a new employer, to secure additional benefits in that scheme.
- transferred to a PRSA effected by the same individual, however this option may only be afforded to individuals who have less than 15 years scheme service at the date of transfer.
- used to provide immediate retirement benefits (i.e. tax-free lump sum, purchase an annuity, approved retirement fund).
If the individual has less than two years membership of the scheme and was contributing to the scheme, either as ordinary contributions to the scheme or as Additional Voluntary Contributions (AVCs) or both, then the individual may have the option to take a refund (less standard rate income tax) of their own contributions paid to the scheme and any AVCs, in lieu of maintaining a preserved benefit. However, if the refund is taken the individual then looses the benefit of any employer contributions made to the scheme for the individual’s benefit.
Grant Thornton Financial Counselling Limited is the Financial Planning arm of the Grant Thornton practice in Ireland and has offices in Dublin and in Limerick.
Grant Thornton Financial Counselling Limited is regulated by the Financial Regulator. Registered office: 24-26 City Quay, Dublin 2. Company registration no. 102489.
Grant Thornton is authorised by The Institute of Chartered Accountants in Ireland to conduct investment business under the Investment Intermediaries Act 1995.