Remember this is not a recommendation. Every member of a pension scheme has personal circumstances to take into account when it comes to retirement. Talk to your financial adviser or broker about your options.

*Current equivalent of Edward’s salary at related employment.

Based on Edward’s personal circumstances (outlined above), Edward has chosen to use his pension pot of €100,000 to give him the following benefits in retirement. For a full explanation of why these options were available to Edward, click on the “Show Full Details” button below.

Under a Personal Retirement Bond (PRB), Edward could take a lump sum of either (whichever gives him a higher lump sum).

Edward opts to take a tax free lump sum based on his salary and service in his original Defined Benefit scheme that the PRB relates to. Edward had sufficient service in his previous Defined Benefit scheme to qualify him for a maximum tax free cash lump sum of up to 150% of the final salary.

Edward opts to take the maximum tax free lump sum available from the PRB of 1.5*€40,000 = €60,000 Remember that the lifetime limit for tax free cash from all pension schemes is €200,000 so Edward took this €60,000 tax-free as he had not previously been paid a lump sum from any other pension arrangement. In addition to his income from the annuity he is entitled to receive a State Pension from age 66 as he had made the necessary PRSI contributions to qualify for this.

In Edward’s case the options for his PRB depended on the options available in his former employer’s DB scheme which are a lump sum and/or an annuity.  Edward has opted  to use the balance of the PRB pension pot (€60,000) to buy an income for life.   

Edward bought an annuity of €1,576 a year with his remaining pension pot of €60,000 (please check details of the annuity rate below).

Check our glossary if you are unsure of any of the terms.

Ultimately, it was Edward’s decision to take a cash lump sum and buy an annuity. He believed it was the best option suited for his circumstances. Speak to your financial adviser or broker to discuss your options before making the decision.

• The annuity rate used in this example is 3.940%, in line with the Actuarial Standard of Practice ASP-PEN 12 (Statement of Reasonable Projection). It assumes a man or woman retiring (July 2022) at age 65 and provides an annuity (Single life pension, payable monthly in advance, 5 year guarantee period, 1% fixed increases each year).