What are my options for my defined benefit pension from a previous employment?
We are regularly asked for advice from people who have a defined benefit pension from a previous employment. When you leave a job where you are a member of a defined benefit pension scheme, then you will be offered a number of options.
The main options available to you will normally include:
- leaving the pension where it is
- transferring your pension value out of the defined benefit scheme and into a Personal Retirement Bond in your name
Annuity Option
By leaving the pension where it is, you can be entitled to a guaranteed annuity income when you access your pension. Of course you can also opt for the annuity income option if you transfer your pension out of the defined benefit pension.
The annuity option within your defined benefit pension depends on the scheme having adequate funds to pay pension benefits to all its members for the rest of their lives. Whereas, if you transfer your pension, the annuity option will be insured by a large pension company.
A lot of people will decide not to take the annuity option anyway – as an annuity pension cannot be passed on to children after death. For this reason, we find that people with children usually decide to transfer their pension out of the defined benefit pension scheme and into a personal retirement bond.
These people are often concerned about future funding in the defined benefit pension and they want to have more control over their pension and to have access to ongoing information about their pension, usually through online access.
The decisions around your options with a defined benefit pension should be discussed with your financial advisor to make sure that you make an informed decision based on your circumstances and needs.
Please feel free to get in touch with us and we will be happy to go through your options with you. You can phone Joanne in our office on 01 5267770 or email info@guardianwealth.ie.
Jim has been providing tax, pension/investment and lifetime financial planning advice to clients for over 30 years. He has an in-depth understanding of Business Owners and their requirements, which allows him to guide his clients through the complex world of long-term financial planning.
