When are you entitled to your employers pension contributions?

If you are thinking of moving jobs, one of the things you need to take into consideration is the value of the pension benefits that you have accumulated and whether you can taken them with you.  So when do your employers pension contributions become yours and what can you do with them?

When are you entitled to your employers pension contributions?

Under legislation, when you have been a member of the pension scheme for 2 years, you become entitled to the value of your employers pension contributions as well as your own.

What if I leave before having the required years service?

You are not entitled to the value of your employers pension contributions if you leave before the 2 year period.  The trustees may waive their right to their entitlement and let you have their contributions too, but that is purely discretionary.

What are my options on leaving?

If you move job, you can do one of the following with the benefits:

1. If you have less than 2 years service, you can take a refund of the value of your own contributions. You can never take a refund of your employers pension contributions, even if their waive their rights to it.
2. Leave it where it is. It will remain invested up to retirement.
3. Transfer the proceeds to a pension plan in your own name (called a Buy Out Bond).
4.  If you have less than 15 years service, you can transfer it to a PRSA.
5. Transfer to a new employers scheme.
6. If you are over 50, you may draw down the benefits.

Transfer to a new employers scheme

If you transfer your benefits to a new employer, then the time spent in the previous scheme also transfers to the new scheme e.g. You were a member of a pension scheme for 5 years and transfer the benefits to a new employer. You are entitled to the value of the new employers pension contributions from day 1 as you have completed the 2 year vesting period.

PRSA’s

Under employer paid PRSA schemes, you are entitled to the value of your employers pension  contributions from day 1. There is no minimum period to satisfy.

The pension benefits should never be the reason why you stay in a job but they should be taken into consideration. If staying in a job for an extra couple of months means you have several thousand euro extra in your pension pot, it should not be discounted.

If you have any questions, you can contact me directly at steven@bluewaterfp.ie