Dealing with your pension on leaving employment

If you are leaving employment and were a member of an occupational pension scheme, you may have a number of decisions to make regarding your pension benefits. This section outlines the decisions that you may be faced with and discusses your options.

Your rights

Option Statement

On leaving service you are entitled to a statement of options regarding what you can and cannot do with your accumulated pension. You will receive this statement from the administrators of your pension scheme within 2 months of you or your employer notifying the trustees that your employment has ended.

Less than 2 years of pensionable service

If you have less than two years’ service, you may be able to claim a refund of your own contributions (not the employer’s), taxed at the basic rate (currently 20%).This is usually not advisable unless you have an urgent pressing need for the money. The more you have in any pension growing with compound interest the better your lifestyle in retirement.

Some schemes may, under their rules, allow you to retain a deferred benefit or permit a transfer to a new employer’s occupational pension scheme or a Personal Retirement Bond. These alternatives are not a statutory right and depend on the scheme’s rules.

More than 2 years’ pensionable service

If you have more than two years’ service you will not be entitled to a refund of contributions. However you will be entitled to choose between:

Retaining your benefits with the scheme, or
Transferring your benefits to:
A new employer’s Occupational Pension Scheme
A Personal Retirement Bond

Depending on your particular circumstances you may also be entitled to transfer to a PRSA. A Certificate of Comparison and written statement are generally required unless an exemption applies (for example, where the transfer value is under €10,000). Fees vary by provider; ask for a quote.

From 1 January 2025, employer PRSA contributions are limited to 100% of salary for tax purposes; any excess is treated as a benefit‑in‑kind (BIK) for the employee.

Defined benefit schemes

If you do not take a refund of contributions, you will retain the right to a pension at normal retirement age. Generally speaking, the more service and the higher your final salary with this particular employer, the greater will be your entitlement. After you leave, your entitlement will increase to take account of inflation, up to a maximum of 4% per annum. Actual revaluation is set each year by ministerial order (for example, it was 4% for 2023).

If you choose to transfer your benefits elsewhere, your pension scheme is obliged to quote you a transfer value. Where the scheme is solvent, that transfer value will reflect the approximate present day value of your future benefit entitlements. However where your scheme is not solvent, the trustees will be obliged to reduce your transfer value in a proportion determined by the degree of insolvency.

There are several reasons why it may make more sense to retain an entitlement from the defined benefit pension scheme of a previous employer rather than to transfer out of the scheme. The reasons are:

Defined benefit schemes provide more certainty than most other pension arrangements, as retirement benefits are not dependent on fluctuating fund values
Where a scheme is insolvent (as many are) it may make more sense to wait for future steps to improve that solvency than to take an actuarially reduced transfer value

Note: If you do decide to retain your benefits there is no guarantee that your existing entitlements will be maintained.

Defined contribution schemes

If you are not eligible to take a refund of contributions and you leave your pension where it is, you will keep your benefits at retirement. Your benefits will be based on the following factors:

Your contributions up to the date of leaving service
Your employer’s contributions up to the date of leaving service
Investment growth or investment losses up to the date you take your benefits
The age at which you take your benefits
Annuity rates at the time that you take your benefits

The last two factors will only be relevant if you choose to, or are obliged to, purchase a guaranteed income for life (an annuity) at retirement.

Transfer Options

You may also transfer your pension – for example to a new occupational pension scheme or to a Personal Retirement Bond or PRSA . In deciding whether to transfer you may wish to consider the following:

Whether the charges would be lower if you leave your pension where it is
Whether you want to invest in funds that are unavailable in your previous employer’s pension scheme, or whether you are happy with the scheme’s fund selection
Whether you would prefer to combine your old pension scheme and your new one to enable you to keep track of them more easily

For more please see the ‘Transfer Options Booklet’ provided by Rockwell.

Early retirement

Instead of the options detailed above, you may be entitled to take early retirement. This may depend on the rules of your scheme, on the consent of the scheme trustees and (for defined benefit schemes) whether the scheme is solvent or not. In occupational schemes, early retirement is usually possible from age 50 with employer/trustee consent. For PRSAs, early retirement from an employment is also possible from age 50; personal pensions are generally from age 60. Outside ill‑health cases, you cannot retire before these ages.

Book your consultation

Ready to talk through your options? Email [email protected] or call +353 1 296 6120. We’ll help you choose the next step for your pension, in plain English.