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Consumer Question:
My husband and I have been making plans for early retirement for the last few years. We hope to retire in 8 years, he will be 62 and I will be 60. His current pension is with KBC bank which is soon to close. With this in mind, we are considering transferring it to a Personal Retirement Bond/Buy Out Bond policy as we would like greater control in how the money is invested. I understand it’s based on a single contribution or transfer of his pension pot to date, but is there anything else that I need to know about how it works? Would he be able to top it up at a later stage?
Answer from Mark Reilly, Pension Propositions Lead, Royal London Ireland
Your understanding is correct in that a Personal Retirement Bond (PRB) is a pension plan which receives a single contribution. It aims to provide a fund you can use to buy pension benefits. This plan is designed to receive a transfer payment from your company pension scheme or another PRB that you have. Once this plan is set up, it becomes your own personal plan in your name. PRBs are also known as Buy Out Bonds.
The trustees of your husband’s current pension scheme will set up the PRB for him if he leaves his job or leaves his current pension scheme; or his company’s pension scheme is winding up. It sounds like he will be able to satisfy at least one of these requirements given KBC is soon to close. Your husband would apply for the policy in his own name and a single payment, or contribution, is transferred from his current scheme to the PRB. Once set up, the Trustees of his previous pension have no further involvement in it.
A PRB offers good flexibility regarding the investment of assets with a choice of funds available. It is important to remember that the value of your fund could fall as well as rise. Your husband will have a high degree of control over how to invest his money. It is well suited to those looking for a medium to long-term investment plan where they can control their level of risk to a strong degree, generally over a minimum contribution of €10,000.
Your Financial Broker can talk to you in more detail about PRB products that may suit your husband and to discuss both your retirement planning needs.
ENDS
This question was submitted to and first published by The Sunday Times.
About Royal London Ireland
Royal London Ireland has a history of protecting its policyholders and their families in Ireland, and recently launched a new Pensions business in Ireland. Our business heritage in Ireland is nearly 200 years. The Caledonian Insurance Company's first office outside Edinburgh opened on Dame Street, Dublin 2 in 1824.
Today, Royal London Ireland is owned by The Royal London Mutual Insurance Society Limited – the largest mutual life insurance, pensions, and investment company in the UK, and in the top 25 mutuals globally, with assets under management of €178 billion, 8.6 million policies in force, and 4,100 employees. Figures quoted are as at 30 June 2023.
Royal London Ireland’s office is based at 47-49 St Stephen’s Green, Dublin 2.