Something I get asked a lot is “when can I mature my pension?”. Because pensions have so many different rules, the answer is “it depends what pension plan you have”. So I will go through what rules are for the 3 different types of pensions that are in Ireland, looking at the earliest and the latest you can draw down your benefits.
Early retirement – Under company pension schemes, with the trustees permission, you can draw down your pension benefits from age 50.
You must have ceased employment with that employer to draw down the benefits early. If you own more than 20% of the voting rights in the company, you must dispose of your shareholding and severe all links with the company i.e. no staying on in a consultancy capacity.
If you do draw down your benefits early, the Revenue will restrict the maximum benefits taken to reflect the fact that you are taking benefits early. A formula is used to calculate the maximum benefits.
The only situation I have found of trustees denying permission is for defined benefit pension schemes. I have never come across the trustee of a defined contribution scheme not allowing a member draw down their benefits early.
Late retirement – Under company pension schemes, the normal retirement age can go up to age 70. If you retire later, you can draw down you benefits then, but you cannot fund for pension benefits beyond age 70.
Early retirement – the rules are not as favourable for personal pension plan holders when it comes to early retirement. The earliest you can draw down your personal pension plans is from 60 years of age.
Late retirement – You can keep on funding into a personal pension plan until age 75. You do not have to retire from your occupation to draw down your pension benefits. In fact, plenty of people in their 60’s, make a personal pension contribution to reduce their income tax liability, immediately mature the policy and claim 25% of the contribution back tax free.
For PRSA’s, it depends which type of PRSA you have. If you have a personal PRSA, the personal pension plan rules apply to you regarding retirement options.
If your PRSA is set up through your employer, early retirement from age 50 is allowed.
If you have to retire due to ill health, under the three different plans, you can draw down your benefits at any age.
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