What Happens If?
Scenario 1: More than two years in the plan.
Should you leave your current employer after more than two years in the pension plan, you will not be able to access your pension fund until you retire. However, you have a number of options in relation to the pension fund you have built up during your time in the company.
Your options once you leave the company with more the 2 years service:
- You can usually leave the value of your pension fund in your previous employer's pension plan until you retire and then use it to get a retirement benefit. This is known as a deferred pension.
- Alternatively you may be able to transfer your pension contributions to a new employer's pension plan if the new employer allows it.
- If you do not join another company pension plan and you decide to set up a PRSA (Personal Retirement Savings Account) you can in certain circumstances transfer your contributions into it. You can then continue your pension saving.
- The final option available is to take the pension contributions from your company plan when you leave and invest in what is known as a buy-out bond or Personal Retirement Bond (PRB) which is an individual lump sum investment. You cannot make any further contributions to the PRB.
Regardless of the option chosen, you will not have access to the funds until you retire. The above is subject to agreement by the trustees. For further information, contact the trustees of your plan or your pension plan advisor.
Scenario 2: Less than two years in the plan.
If you leave your employment with less than two years' service while a member of the plan, you may or may not be entitled to the benefit of your employer's contributions. This will depend on the plan rules.
The options as set out above in Scenario 1 apply to whatever benefit has been secured, whether it relates only to your own contributions or to both your contributions and those of your employer. However, you may also opt to receive the value of your own contributions immediately, less tax. If you opt for this, you forfeit the right to the benefit of your employer's contributions.
What happens if I can't work due to ill-health?
Ill-health cover and pension payment
If you are out of work due to ill-health, your employer may provide you with an ill-health benefit also known as income protection benefit. This is an insurance policy designed to replace your income if you are not able to work due to ill-health.
Where your employer offers this benefit the policy will provide salary cover if you are absent due to ill health for a certain period of time. If your employer has this type of policy, then you could receive up to 75% of your salary (including the State benefit). As an additional level of cover the policy may offer what is known as Premium Protection. Apart from covering your salary, the policy will also provide cover to continue the payment of your pension contributions should you be out of work due to
ill-health.
Your 'Member Schedule' or 'Member Booklet' issued when you join the pension plan, will give details of Ill-Health Benefit if it is provided by your employer
Ill-health early retirement
Should you be forced to retire early on the grounds of ill-health your pension benefits will be made available to you at that stage (if the trustees agree).
What happens to my pension fund if I die before I retire?
If you die before you reach retirement age, your pension plan rules will determine what will be paid to your dependants. This benefit is known as 'Death in Service' benefit and also known as 'Life Cover'.
The benefit for each company pension plan is different and may include one or all of the following:
- A lump sum, often a multiple of your salary or pensionable salary
- Payment of the value of your personal pension contributions, including any additional voluntary contributions (AVCs)
- A spouse's or dependant's pension, payable for life
- A child's or orphan's pension, normally ceasing at age 18 (later if in full-time education) subject to certain limits
Your 'Member Schedule' or 'Member Booklet' will give details of Death-in-Service Benefits (or Life Cover) if it is provided by your employer
What happens if I want to retire early?
Subject to agreement from your employer and trustees, you may be able to retire from age 50 onwards. However, this will mean that your pension will be much lower than if you had continued in employment and continued making contributions up to your expected retirement age, which is usually set at 65 years of age.
Your 'Member Schedule' or 'Member Booklet' will give details of the normal retirement age for your pension plan.
