Irish Pension Information

Early Pension Access Step By Step

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Your questions should be answered as you make your way through the Pension Access Information step by step. 

If we haven’t answered your question by the time you complete the process please contact us for more help.

What happens to the fund left in my pension?

When you access some of your pension, your entire fund is transferred from your existing scheme into a personal retirement bond or PRB as previously discussed. From there your request to access a set amount of your fund is sent to your PRB provider.

 The remaining funds are then placed in an Approved Retirement Fund (ARF) for you to take at a later date. The funds in the ARF will be reinvested so they can continue to grow until you decide to access them at a later date. 

Below we will look at how the investment process works and what to look out for to ensure you choose the investment most suited to you. 

Woman checking her pension performance on paper.

Investment Risk Levels Explained

Investments are categorised on a scale of 1 to 5. 1 being the lowest risk and 5 being the highest risk. 

As you get closer to retirement you should start to reduce the risk of your investments regardless of whether or not you access your fund. If you keep your funds in a high-risk investment and suffer a loss you may not have enough time to recuperate that loss before you withdraw your funds and retire. 

If you have not chosen your own investments before (for example if your pension was in an employer fund) it can seem like a daunting task. Thankfully this is not the case. The Central Bank has a strict process in place to ensure you can be matched with the right investment for you.  This process starts with a Risk Questionnaire.

 

Risk Questionnaire

How do you know what risk level is most suited to you? The first step is completing a risk questionnaire. These forms are designed to give you an indication of what level of risk is most suited to you. Your advisor will ask you to complete the form before making an investment recommendation. The questions on the form are quite straightforward and easily allow you to get an indication of what risk level is ideally suited to you based on your current situation and your own personal preferences.

Some people will want to take some risk to try and maximise their returns while others may prefer to limit their risk as much as possible and be happy to just maintain the fund they already have. 

Once you complete the form your advisor will be able to tell which risk level is going to work for you. They will then review a range of investments available within that risk level and make a recommendation for you. 

 

Fund Charges

Each month/year administration charges are taken from your pension fund. You may have been unaware of these charges as they are taken directly from your pension fund. They are not issued to you as an electricity bill would be so they can be easy to miss. 

 

Fund charges can make a significant difference to the value of your fund over time. When considering investments it is important to compare these charges to ensure they offer good value for money. These charges go to fund managers so normally the better-performing funds will have higher charges.

 

For example, when recommending investments your advisor will normally provide a 5 year performance report on each investment recommended. While it is true that past performance does not guarantee future performance a fund manager/s who has consistently provided excellent returns for their clients over the past 5 years would (in my opinion) be a better choice than a fund manager who has consistently provided a loss over the same period. I would be willing to pay a higher amount in charges to join the fund that has a proven track record of providing results to its clients. 

 

Your financial advisor will take all fund charges into account when making their investment recommendations to you.  

Making a Recommendation

Once your Financial Advisor receives your risk questionnaire they will review the market and come back to you with a list of investment options most suited to you. You will already be familiar with most of the companies providing investments for example Zurich, Aviva, Irish Life, Royal London etc.

 

Your Advisor will provide a document to you called a Statement of Suitability. This document along with the risk questionnaire is  part of the process outlined by the Central Bank for recommending investments. On the Statement of Suitability, your advisor will put into writing WHY based on your current financial situation and your risk questionnaire they are recommending a particular investment.  

 

 

We have gone into a lot of detail here. This is to ensure you are familiar with the full process however it is your Financial Advisors job to do most of the heavy lifting. You simply complete the Risk Questionnaire and your advisor will do the rest. They will suggest the investments most suited and then they will justify their recommendations in writing which offers an additional layer of protection for you. If you have set up your own pension in the past you will already be familiar with this process. 

STEP 6 - Get Your Options for Free

At this stage it is fair to say that you now have a lot of helpful information in relation to accessing your pension. If you would like to confirm that pension access is available and have your options prepared by a financial advisor for free take a look at getting your options verified for free.