I’ve moved jobs a couple of times over the years, how do I keep track of my pensions?

As you move jobs you may start to accumulate small pension benefits in different employer pension schemes.

When you leave a job you will have to decide what to do with the pension benefits you may have built up in your former employer’s pension scheme.

There are three basic options:

- You can leave the benefits to grow in that scheme until you retire. This option can throw up a challenge when it comes to your retirement as you may have to go back and try and contact these former employers to gain access to your pension benefits.
- You can transfer your benefits to your new employer’s pension scheme, if you will be joining such a scheme. You will get these benefits when you retire from your new employer.
- You can transfer your benefits to a Buy Out Bond (also called a Personal Retirement Bond). A series of Buy Out Bonds in your name can become the hub for all the pension benefits you may have built up over the years at your different jobs.

IMPORTANT. Where you hold a pension in a former employer’s defined benefit pension scheme, there are a number of factors to consider before making a decision to transfer your funds to a new employer’s scheme or to a Buy Out Bond.

What is a Buy Out Bond?

You can consolidate your pension benefits from the various jobs you may have held throughout your career into Buy Out Bonds, which you own and control.

The value of benefits you may have built up in a former employer’s pension scheme are calculated and this ‘transfer value’ is then paid into your Buy Out Bond.

Once in the Buy Out Bond, the ‘transfer value’ is then invested in a fund or series of funds. Because you control the Buy Out Bond, you choose how to invest this money and when you can draw on it.

This level of control is a great benefit of a Buy Out Bond.If you leave your pension benefits in former employers’ schemes you have no control over how the funds are invested.

Buy Out Bonds are also a flexible product. You can transfer the funds built up in your Buy Out Bond to another Buy Out Bond with a different life insurance company at any stage or you can transfer them into another employer pension scheme, if you join one at a later date.

If you die before drawing on the Buy Out Bond, the value of the funds in your Buy Out Bond at that stage will be paid to your estate, for the benefit of your next of kin.

How do I decide where to invest my Buy Out Bond?

You may be relying on your Buy Out Bond to provide an important source of income in retirement, so it’s vital that you invest it wisely. There are many options available to you, from low and high risk funds investing in particular types of assets, to managed or mixed funds investing in a spread of assets and self-directed funds where you choose the funds or assets in which you invest.

The funds you decide to invest in should offer you a diversified range of investment options that can meet your changing circumstances over time.

Any choice you make should be based on the level of investment risk you are comfortable with and should take into account your financial circumstances and goals. It is important to understand that the value of your Buy Out Bond can fall as
well as rise, depending on which funds or assets you invest in.

How can I access the funds from my Buy Out Bond?

Depending on the type of pension scheme from which the transfer value paid into your Buy Out Bond came from, you will have a number of options when it comes to taking your retirement benefits:
- You may be able to take part of the fund as a lump sum
- You may be able to use the balance to buy an annuity, or
- You may be able to transfer the balance to a mix of an Approved Retirement Fund (ARF) and an Approved Minimum Retirement Fund (AMRF) in your own name. This depends on whether the pension scheme, you took the transfer value from, provided this option to you at the time of transfer to your Buy Out Bond.

Remember: You can draw on your Buy Out Bond from age 50 onwards. If you become seriously ill before the age of 50, you may be able to draw on your Buy Out Bond immediately.

If you have a financial planning or product question please contact us : Know more. 091 44 11 88 or office@nelsonlife.ie

This article was written by Rory Nelson, founder of Nelson Life. Rory is celebrating 20 years in financial planning this year. Professional qualifications include; UCD Specialist Diploma in Wealth Management, Pension Trustee Practitioner PTP, UCD Professional Certificate in Stockbroking,UCD Professional Certificate in Asset Management (SIA),  QFA FLIA, Pensions Diploma, Mortgage Advice Diploma, CFP module – Tax & Estate Planning and has a degree in BA Accounting & Finance. He has regularly participated in national financial press.


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WARNING: Past performance is not a reliable guide to future performance.WARNING: The value of your investment may go down as well as up.WARNING: You may lose some or all of the money you invest.WARNING: These funds may be affected by changes in currency exchange rates.WARNING: If you invest into this product you will not have access until you retire.WARNING: The above content does not constitute investment advice, as it does not take into account the investment objectives, knowledge and experience of financial situation of any particular person. Prospective investors are advised to make their own assessment of the information contained herein and to obtain professional advice suitable to their own individual circumstances.WARNING: The information contained in this document is based on our understanding of current tax legislation and the current Revenue Commissioners interpretation thereof and is subject to change including retrospectively without notice. This is intended as a general guide only and is not a substitute for professional tax, legal and investment advice. 

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