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Consumer Question:
My employer has just informed us that it is winding up its defined benefit (DB) pension scheme. One of the options open to me is to transfer the money in my pension into a Personal Retirement Bond (PRB). What exactly is a PRB and is it a good idea?
Answer from Mark Reilly, Pension Proposition Lead at Royal London Ireland
When a pension scheme is being wound up, the trustees of that scheme usually put a default arrangement in place that can accept members’ funds upon wind-up. This is often a PRB, arranged on a group or bulk basis.
One of the advantages of transferring your pension benefit to this type of PRB is that the charges may likely be lower than would be the case if you were transferring the benefit to an individual pension arrangement – because a number of your colleagues are also likely to be transferring their pension benefits to the same PRB.
However, check the other options open to you and choose the one that benefits you most. For example, if you are a member of another pension scheme, you could transfer your pension benefit to that scheme. If you have been in a DB scheme for under 15 years, you can transfer it to a Personal Retirement Savings Account (PRSA).
When comparing the various options, check the charges (such as the annual management charge, policy fees and any early encashment penalties); the investment choices available to you; and the benefit options after transferring (such as when you can drawdown your pension and what tax-free lump sum you can get).
It might be a good opportunity for you to talk to a Financial Broker to discuss your retirement planning goals overall and determine what the best option is for you based on your personal circumstances.
ENDS
This question was submitted to and first published by The Irish Independent
About Royal London Ireland
Royal London Ireland has a history of protecting its policyholders and their families in Ireland, and recently launched a new Pensions business in Ireland. Our business heritage in Ireland is nearly 200 years. The Caledonian Insurance Company's first office outside Edinburgh opened on Dame Street, Dublin 2 in 1824.
Today, Royal London Ireland is owned by The Royal London Mutual Insurance Society Limited – the largest mutual life insurance, pensions, and investment company in the UK, and in the top 25 mutuals globally, with assets under management of €178 billion, 8.6 million policies in force, and 4,100 employees. Figures quoted are as at 30 June 2023.
Royal London Ireland’s office is based at 47-49 St Stephen’s Green, Dublin 2.