Pensions from former employments

In Ireland we expect to change employers several times over our working lives. Each time we leave we are faced with some options on the defined contribution staff pension scheme:-

– Transfer to the pension scheme with the new employer

– Transfer to a personal retirement (Buy-out) bond

– take a refund of own contributions, less income tax, where less than 2 years contributions have been made.

For most of us, we defer any decision and just leave the money there until we feel we are settled in the new job. However, life is changing all the time so often several years can pass before any thought goes into the old pension scheme.

During that time former staff members may not receive any updates on the scheme and consequently don’t know what’s happening to their share of the fund. It is important to find out what is happening and to consider taking more control over this investment. For example, some schemes automatically switch former staff members to cash holding accounts when they leave the employment. These funds will not lose money but will never make any either. This could be a shock after 20 years!

Ask yourself:

1. How can I get accurate and timely information on fund performance and any costs being incurred?

2. What investment fund switching options are available to former staff members?

3. Is my personal attitude to risk consistent for instance with the level of equity exposure in my fund?

4. Is there any ongoing investment advice available to me?

If you are unhappy with the answers and want to take more control, a personal retirement bond may be the answer. As well as having multiple investment fund choices and a known cost structure, many brokers can offer to transfer your funds from the former scheme with 100% allocation. This means that nothing is taken out by the receiving life assurance company on the transfer. More importantly the experienced broker will be happy to arrange for 6 monthly reviews of your pension fund performance and ongoing fund choices. This should be invaluable.

Good Financial Housekeeping

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