The pension conundrum: Question is – to transfer or not

Defined benefit pension plans below 140,000 active members

Protecting your nest-egg can be hard work. Getty Images

Protecting your nest-egg can be hard work. Getty Images

Consider this. You’re 63 and are trying to decide how best to fund your retirement. You have been quoted a transfer value of €487,500 for your pension, the amount you will receive if you take the money out of your company fund and put it in your own fund.

You have two options: stay in the company defined benefit scheme, and take a €200,000 lump-sum and a pension of €15,000 a year “guaranteed”; or accept the €487,500 transfer value, put it in an approved minimum retirement fund (AMRF), and draw down a lump sum of up to a quarter of the fund – €121,750 – tax-free. Our retiree will then have €121,750 in their bank account, and with the remaining €365,750 fund, can live off the capital and draw down €14,000 a year.

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