Do you have a pension with a previous employer?
The days of people working 30 or 40 years with the same employer and then retiring appear to be behind us in the modern world.
It’s now more common for people to switch jobs in the hunt for a higher salary, better benefits, better career prospects or even for self-employment.
Unfortunately, one thing that regularly slips off the radar when moving jobs is the pension fund they or their old employer were paying into.
It is estimated there could be as much as €500 million in unclaimed pensions in Ireland.
If you have an old occupational pension scheme, your pension fund is currently under the control of the Trustees of that scheme. They decide what you can invest in and when you can access the benefits.
In this latest blog I will try and outline some of the main options you have with your old employer’s occupational pension funds and the pro’s and cons of potential transfers.
Your Options
Dependent on how long you were a member of the scheme for – your transfer options will broadly look like this:
- Leave the pension fund within the employers scheme
- Transfer to your new employers pension scheme
- Transfer to an individually owned pension product
If you were a member of the scheme (the scheme, not employment) for less than two years – there may be an option to receive a refund of the value of your own contributions.
Pro’s and Cons
Some of the pro’s of taking a transfer:
- You will own the fund and decide when you access the benefits from age 50 onwards
- You have control over the pension fund and input into the investment strategy
- There is then no need for any future interaction with the Trustees of the employers scheme
Con’s of taking a transfer:
The only potential downside of taking a transfer is that there is a chance that the annual investment charges could increase.
As the only con is a potential increase in investment fees, it’s important you get clarity on this prior to deciding whether to transfer.
Recent Case
I had a recent case where my client had a pension benefit with a previous employer, and he was over age 50 and trying to access the tax free cash.
As it was still in the scheme it was under the control of the Trustees who had to sign off on him accessing his benefits.
The issue was that the employer was the appointed Trustee and the employer had been taken over a few times since he left.
It took what felt like an age to get someone to sign on behalf of the now liquidated employer as the Trustees and as a result caused a significant delay in my client accessing his tax-free cash.
For this reason alone, it is worthwhile considering your transfer options.
What should you do?
Everyone’s situation is different, remaining in the ex-employer scheme may be best for some, accessing benefits early or taking a transfer may be best for others.
The important thing is that anyone who has a pension with a previous employer is aware of their pension options in relation to their pension fund held within their employers scheme therefore allowing them to make an informed decision on what to do.
Next Steps
Download our free pension transfer guide here!
If you already have your leaving service options for your old pension – schedule a free leaving service pension consultation with us here or even check out our advice process here to see how we can help.
Get in touch
Drop me an email, francis@fortitudefp.ie or request a callback.
You can also give me a call on 086 0080 756Â or access our diary here and book a call at your convenience.
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Our blog posts are intended for information purposes only and should not be interpreted as financial advice.
You should always engage the services of a fully qualified financial planner before entering any financial contract.
To discuss engaging the services of Fortitude Financial Planning please email us at info@fortitudefp.ie.
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