It is possible to take money out of your pension in Ireland. There are a specific set of rules which apply depending on the type of pension plan you have. The most notable rule is that you must be over 50 to access any pension in Ireland. You can find out if you are eligible to take money out of your pension early using our online tool. Can You Take Money Out of Your Pension?
We are going to take a look at the rules for taking money out of your pension early in Ireland. As the rules differ depending on the type of pension you have, we will look at the specific rules for each pension type.
Accessing Employer Pension Early
You can access an old employer’s pension from 50 once you no longer work for the same employer. When you leave your employer and stop paying into the pension scheme you become a deferred member. Once you are 50 or over and are a deferred member of your pension scheme, you are eligible to cash in all or some of your pension.
There is no requirement to stop working in order to take money out of your employer pension early. You can also decide how much you would like to take. You can choose to leave some of your funds invested to take at a later date.
Sometimes you may have contacted your pension provider and asked whether or not you can access your pension early. They may have said that you are not eligible for access until you reach the retirement age of your scheme which is normally 60 or 65. If this has happened to you, you can still access your pension early. However, you will need the help of an independent financial advisorto do so.
Can I Cash in My Private Pension Early Ireland?
Private pension usually refers to a PRSAwhich is also known as Personal Retirement Savings Account. When you take out a PRSA there is an option for your employer to contribute. If you employer did contribute to your private pension then the rules are different. We will look at the rules for PRSA’s with employer contributions in the next section.
For now, lets take a look at PRSA’s with just personal contributions. Personal contributions are money paid into your pension by you directly.
If you have a PRSA with only personal contributions then the rules state you cannot access this pension until you reach age 60. Once you turn 60 you can access all or some of your pension depending on your needs. You can continue to work. Many people access their PRSA’s early to reduce their working hours when nearing retirement. This can make the transition from working to retirement smoother.
Please note if you owed a limited company and the company paid into your pension and not you personally then you need to review PRSA’s with employer contributions below.
Withdrawing Money from PRSA (Employer Contributions) at 50 Ireland
If you have a PRSA and an employer has made at least one contribution to your pension then you are able to access the funds early from 50. However, unlike accessing an employer’s pension if you want to access a PRSA with employer contributions before 60 you have to be out of work.
If you are working, you will not be eligible for early access. You can return to work once you have accessed your pension with no limitations but while withdrawing the fund you have to be out of work.
How to Withdraw your Pension Early Ireland?
If you are interested in early pension access the first step is having a financial advisor review your pension. Your advisor will ask you to complete a one-page form which will allow them to request the details of your pension directly from your provider.
Once your advisor receives these details, they will be able to review your pension in full and prepare a list of your options in relation to access. You can then review the options open to you and see if any are suitable. If you decide to proceed with access your financial advisor will be able to process access for you.
Pension Lump Sum at 50
Many people are interested in a pension lump sum at 50. Taking a pension lump sum at 50 is essentially accessing your pension early. To withdraw your lump sum, your financial advisor processes partial access for you. You receive this lump sum tax free and it is normally 25% of your pension fund. You can continue to work with no restriction once accessing an old employer pension scheme.
The remainder (75% of your Pension Fund) is then reinvested for you to take at a later date. For example, when you retire.
Tax on Early Pension Access Ireland
You only pay tax on funds received from your pension through early access if you decide to take more than your tax-free lump sum. If you decide to take more from your pension fund, you will pay tax on this as if it were additional income. For example, if you are on the 40% tax rate, you will pay 40% tax on any funds you withdraw over your tax-free limit.
This is why many only access their tax-free lump sum while working. This allows them to withdraw the remainder of their pension in a tax efficient manner later in life.
Interested in Early Pension Access Ireland?
If you would like to find out more about early pension access in Ireland, you can do so by using our early pension access checker. You will get an instant result online. If you are eligible for early pension withdrawal, your results page will show a list of the options which may be open to you. You will also have the opportunity to have your options prepared by a financial advisor for free with no obligation if eligible. Find out more… Can You Take Money Out of Your Pension?