Transferring My Pension

A pension transfer means moving the value of your pension benefits from one pension arrangement to another. The destinations available depend on your existing pension type, the scheme rules and applicable legislation. Transferring a defined benefit pension may involve giving up a promised retirement income in exchange for a transfer value.

This decision may arise due to a career change, the closure of your existing pension scheme, or the need to consolidate multiple pensions accumulated over time.

If you’re unsure whether transferring your pension is the right choice, consult one of our Qualified Financial Advisors today. Our experts will provide the right guidance and advice, ensuring you don’t lose out on valuable special benefits or low fees associated with your current pension.

The level of risk involved in transferring your pension depends on several personal factors. The first step is to identify your current pension type and evaluate the available transfer options.

Types of Pensions and Transfer Considerations

1. Defined Contribution (DC) Pension

• A defined contribution occupational pension builds up a fund from contributions and investment returns, less charges.
• When a transfer is permitted, potential destinations include another approved occupational pension scheme, an approved buy-out bond (also called a Personal Retirement Bond), or a PRSA.
• Occupational pension benefits can transfer to a PRSA when you change employment or the scheme winds up, provided benefits have not become payable. Separate rules apply to AVC transfers.
• Eligibility depends on the scheme rules, legal requirements and the receiving arrangement.

2. Defined Benefit (DB) Pension

• A defined benefit pension promises retirement benefits calculated under the scheme’s rules, usually using salary and pensionable service. DB schemes exist in both the public and private sectors. The security of benefits depends on the scheme and applicable protections. Transferring to a defined contribution arrangement means giving up the DB promise and taking responsibility for investment and retirement-income risks.

Want to learn more about DB pension transfers? Speak with one of our Qualified Financial Advisors today.

3. Personal Retirement Savings Account (PRSA)

• A flexible pension option suited for those transitioning from employment to self-employment.
• Can accept both lump-sum payments and monthly contributions.
• Ideal for individuals with a fluctuating income, as payments can be started or stopped as needed.

4. Personal Pension Plan (PPP)

• A Personal Pension Plan, formally known as a Retirement Annuity Contract (RAC), is generally used by self-employed people or people with relevant earnings from non-pensionable employment.
• It is not a destination for transfers from an occupational pension scheme.
• Personal contributions may qualify for Income Tax relief, subject to age-related limits, eligible earnings and Revenue rules.
• Employer contributions do not receive the same tax treatment as employer contributions to a PRSA.
• Available investment funds and charges vary by provider.
  

Key Takeaways

Understanding your pension type and exploring transfer options is crucial before making a decision. Consulting a financial advisor can help you weigh the risks and benefits to ensure your pension aligns with your long-term financial goals.

Reasons to Transfer Your Pension Between Providers

• Consolidation – If you’ve worked for multiple employers, you may have accumulated several pensions. Combining them into one plan can make financial management easier.

• Improved Benefits – A new provider might offer better benefits, such as lower fees, more investment options, or greater flexibility in accessing your pension.

• Lower Fees – If your current pension has high management fees, switching providers could help reduce costs and increase your retirement savings over time.

• Returning Home – If you previously worked abroad, transferring your pension to your home country can simplify management and align with local regulations.

• Scheme wind-up – If your employer’s pension scheme is winding up, the trustees will explain how your benefits will be secured and which transfer options are available.

• Moving abroad – You may be able to retain your pension in its existing country or transfer it to an eligible overseas arrangement. Check the legal requirements, charges and tax treatment before deciding.

Considering a pension transfer? Speak with a financial advisor to explore your options and find the best solution for your retirement goals.

Key Considerations Before Transferring Your Pension

• Exit Charges and Transfer Costs
  Some pension contracts have early-exit charges or other deductions. Check your specific terms and compare any transfer costs with the new arrangement’s ongoing charges. PRSA providers cannot charge for transferring a PRSA to another PRSA provider or an occupational pension scheme.
• Guaranteed Benefits
  A transfer may permanently remove valuable benefits, including guaranteed annuity rates, a promised pension income or dependant benefits. Establish which benefits you would lose and their value before proceeding.
• Cooling-Off Period
  A new pension contract may have a cancellation period, depending on the product. This does not guarantee that a completed transfer can be reversed or that your former scheme will restore your benefits. Confirm the cancellation terms and potential financial consequences before proceeding.
• Provider Bonuses
  Some pension contracts include loyalty bonuses, terminal bonuses or other enhancements. Check whether transferring would cause you to lose these benefits and whether they are guaranteed or discretionary.
• Tax Implications
  A permitted transfer directly between eligible Irish pension arrangements will generally preserve the pension’s tax-approved status. Overseas transfers require separate checks and may trigger tax charges. A transfer can also affect your retirement options, so confirm the tax treatment before proceeding.
• Investment and Retirement-Income Risks
  Transferring from a defined benefit pension to a defined contribution arrangement means giving up the DB pension promise. Your future benefits will depend on investment performance, charges and how you use the fund at retirement. During a transfer, investments may be sold and moved as cash, creating a period out of the market. Pension values can fall as well as rise.
• Proximity to Retirement
  If you are approaching retirement, compare how a transfer could affect your retirement date, lump-sum entitlement and income options. Consider whether any potential savings or additional flexibility justify the costs and loss of existing benefits.

Make an Informed Decision

Before transferring, compare your existing pension with the proposed arrangement, including charges, guarantees, investment choices and retirement options. A qualified financial adviser can help you assess whether a transfer suits your circumstances and long-term retirement goals.

The Process of Moving Your Pension

Transferring your pension involves several administrative steps, which MyPension can assist with. However, staying informed throughout the process is essential.

1. Determine Your Transfer Value

Ask your current scheme or provider for a transfer value quotation. For a defined contribution pension, this generally reflects the value of your investments, allowing for applicable deductions. For a defined benefit pension, it is an actuarially calculated value of your pension benefits. Check any quotation expiry date, guarantees and conditions.

• The transfer value – The total pension amount available for transfer.
• Details of accrued benefits – Any special guarantees or perks associated with your pension.
• Potential transfer costs – Exit fees, charges, or penalties (if applicable).
• Technical transfer details – Information required by the new provider to process the transfer.

2. Application Process

Your new provider will require you to complete an application to initiate the transfer. This typically involves filling out forms, which can often be done online, though some providers may require physical documents.

3. Permissions and Forms

• Your new provider will need permission to contact your current provider to begin the transfer process.
• Your current provider may require additional forms and will inform you of any applicable charges or penalties for transferring out of their scheme.

4. Transfer Timeline

• Transfer times vary by scheme, provider and transfer type. Ask both parties for an estimated timetable and any applicable deadlines. Missing documents, benefit checks and overseas requirements can extend the process.

5. Investment Continuity

• Your investments may need to be sold and transferred as cash before being reinvested. This can create a period out of the market, during which you may miss gains or avoid losses. Where an in-specie transfer is available, investments may move without being sold. Pension values can fall as well as rise, and a transfer does not guarantee growth or protect against losses.

By familiarising yourself with these steps and coordinating effectively with both your current and new pension providers, you can ensure a smooth and informed transfer process.

Our team of Qualified Financial Advisors and Pension Administrators are here to guide and assist you at every stage of the transfer.

Considering a pension transfer? Speak with one of our Financial Advisors today to determine if transferring your pension is the right choice for you.

Transferring your pension may involve costs, but the potential benefits of a new provider could outweigh these expenses. To make an informed decision, it’s essential to evaluate exit costs from your current provider.

Key Costs to Consider:

• Exit Fees – Some providers charge a penalty for transferring, often calculated as a percentage of your total pension value.
• New Plan Fees – Your new provider may have administrative or management fees that should be assessed before making the switch.

Get Expert Guidance

A Financial Advisor will help you:
✔ Understand the total costs involved in transferring your pension.
✔ Compare new plan fees to determine if the switch is financially beneficial.
✔ Provide personalised advice to ensure you make the best decision for your future.

Can I Cash In My Pension When I Leave?

Leaving employment does not normally allow you to cash in your pension. Benefits can be taken only when the applicable retirement or other permitted access conditions are met.

If you leave an occupational scheme with less than two years’ qualifying service, a refund of your own contributions may be available or required, normally less 20% tax. This is not a refund of the entire pension fund. Depending on the circumstances, transferring those contributions to a PRSA may be an alternative.

Ask the scheme administrator for your leaving-service options and obtain advice before giving up valuable benefits.