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Consumer Question:
My defined benefit (DB) pension scheme is winding up and I have been given an option of transferring the money in my pension to a Personal Retirement Bond (PRB). If I transfer my pension into a PRB, will l I have to buy an annuity with my PRB when I retire? I had heard that the Approved Retirement Fund (ARF) option is not available with PRBs?
Answer from Mark Reilly, Pension Proposition Lead at Royal London Ireland
You will be able to access an ARF or annuity at retirement if you transfer the money in your existing pension to the PRB. Before June 22, 2016, the ARF option was not available for transfers from a Defined Benefit (DB) scheme, except for Additional Voluntary Contributions (AVCs). This is no longer the case.
Weigh up the pros and cons of annuities and ARFs before deciding which option to take up at retirement. A big advantage of ARFs is that any money remaining in your ARF after your death can be left to your next of kin. With an annuity, the payments will stop on your death, unless a minimum payment period or a spouse provision is put in place at the start. However, as annuities offer a guaranteed income for the rest of your life, they are deemed by some to be the more secure option.
You mention you have been given the option of transferring your pension to a PRB. This is just one option open to you on the wind-up of the pension scheme. You will also be able to transfer your benefit into a new company pension scheme – such as any defined contribution scheme that your employer sets up. Alternatively, you can transfer your pension to a Personal Retirement Savings Account (PRSA).
You need to compare the PRB with the alternatives available to you, particularly in relation to charges, investment choices and the benefit options available after transferring.
We recommend you talk to your Financial Broker to determine what the best option is for you based on your own personal circumstances.
ENDS
This question was submitted to and first published by The Sunday Independent
About Royal London Ireland
Royal London Ireland has a history of protecting its policyholders and their families, and it is committed to continue to do so for a long time to come. Our heritage in Ireland is 190 years starting when the Caledonian Insurance Company's first office opened on Dame Street, Dublin 2 in 1834. Today, Royal London Ireland is owned by The Royal London Mutual Insurance Society Limited – the UK’s largest mutual life insurance, pensions and investment company, and in the top 30 mutuals globally, with assets under management of €197 billion, 8.5 million policies in force, and over 4,400 employees. Figures quoted are as at 30 June 2024.
Royal London Ireland’s office is based at 47-49 St Stephen’s Green, Dublin 2.