Retirement is your time. It is the start of a new and exciting part of your life and you have the chance to enjoy the freedom that it presents. You can control what you want to do and when you want to do it.
Until now, your investment goal was to save the biggest possible nest egg for your retirement by investing in a pension plan. When you retire, you will need to make sure that you can get on with enjoying a very fulfilling retirement.
The most important decision you will have to make is what to do with your retirement fund.
At retirement you will have a number of options available to you. These may include:
- Taking a tax free cash lump sum, subject to limits set by the Revenue.
- Receiving a pension or annuity (a regular income for the rest of your life).
- Transferring some or all of your retirement savings to an Approved Retirement Fund (ARF) or an Approved Minimum Retirement Fund (AMRF).
- Taking as a taxable lump sum.
You should carefully consider all options available to you as there are advantages and disadvantages depending on which options you choose.
All pensions allow you to take a tax free cash lump sum. With A Personal Pension and PRSA the maximum that you can take is 25% of the value of your pension fund. With a company pension plan the maximum tax free cash that you can take at normal retirement age with 20 or more years service is one and a half times your final earnings. Lower amounts are payable if you retire early or have less service.
The amount of your pension/annuity will depend on the amount of your retirement fund left after you have taken any tax free cash lump sum.
It is very important to review your pension plan the closer that you get to your retirement age. Typically, your pension should be invested in very cautious or secure funds in the years leading up to your retirement to prevent a sudden fall in the value if markets become volatile.
Please contact me approximately 3 years prior to your retirement, so that we can discuss the most suitable options for you.
