What is a Personal Retirement Bond?

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When you leave your job, what to do with your pension can be a big decision. Instead of leaving your money in your old employer’s pension plan, you can consider a Retirement Bond. 

This gives you more control over your pension savings, letting you choose how to manage and grow your money for retirement.

What is a Personal Retirement Bond (PRB)?

A retirement bond is a unit-linked pension plan that enables you to invest single contributions. 

A PRB, sometimes referred to as a Buy Out Bond or a Transfer Bond, operates as a portable pension pot that you own and control completely, giving you total control over your retirement funds.

Usually, individuals opt for a retirement bond when leaving a company pension, often due to changing jobs. This allows you the flexibility to switch jobs and carry your pension along.

When can a PRB be used?

  • When leaving employment
  • When leaving a pension scheme or
  • For large-scale withdrawals, such as a scheme winding up

Reasons to choose a PRB

Consider these reasons to opt for a Personal Retirement Bond (PRB):

Independence from Previous Employers or Trustees

Owning a PRB eliminates the need to stay connected with your former employer or trustees. 

The PRB policy, established by the pension scheme’s trustees, involves trustee signatures only during the setup, providing you with control and ownership over your retirement fund without ongoing involvement from your previous employer or trustees.

Ownership and Control in Your Hands

A Retirement Bond serves as a portable pension pot under your ownership and complete control. The policy, issued in your name, allows flexibility in asset investment based on your risk profile. With True Wealth guidance, you can choose from a diverse range of funds.

Unlike some traditional pension plans, you are not required to consult with pension Trustees before making decisions about your fund. This empowerment ensures that you have the autonomy to manage your retirement savings according to your individual preferences.

Timing of Benefits at Your Discretion

Enjoy greater control over when to take benefits from your PRB. 

As a general rule, you can take your pension benefits:

  • After age 50 if you have retired from the employment of the original transferring pension scheme.
  • Or at the normal retirement age of the original transferring pension scheme which will be between 60 and 70 years.
  • Or possibly earlier due to serious ill health. If you retire early because of ill health, you must provide medical evidence to support this.

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Tax-Free Growth Potential

The money within your Retirement Bond has the current advantage of growing tax-free. 

This tax advantage provides the potential for accelerated growth compared to other savings plans subject to taxation, contributing to the overall efficiency of your retirement savings strategy.

Consistent Retirement Options

Your retirement options remain consistent with those allowed in your previous scheme. 

Whether you prefer a secure income for life, flexible access to funds, a lump sum payment, or leaving your savings invested until needed, a PRB accommodates the same choices.

Full Payout on Death

In the unfortunate event of your death before retirement, the full value of your PRB is paid out to your estate. This feature ensures that your beneficiaries receive the entirety of your PRB’s value upon notification of your passing.

Tax-Free Lump Sum at Retirement

Upon retirement, you have the option to take a portion of your pension fund as a tax-free lump sum, currently subject to a lifetime limit of €200,000. 

This financial flexibility provides the opportunity to fulfill long-awaited personal endeavors or indulge in activities you have always envisioned.

Is a Personal Retirement Bond right for you?

A PRB might suit you if

Can I cash in my retirement bond?

You are not allowed to take money out of a Retirement Bond until you are at least 60 years old. 

There are two exclusions to this rule: you can retire at any age due to illness, or you can start receiving benefits from your Retirement Bond at age 50 if you have left service.

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What are the charges?

Fund Charges

The Fund Charges will depend on:

  • Your chosen Personal Retirement Bond option, which determines the plan management charge;
  • and
  • The selected funds you’re invested in, determining the fund management charge

The Fund Charge may consist of a fund management charge (FMC), a plan management charge (PMC), or a rebate which is applied as bonus units to your policy.

Allocation rate

The portion of your single contribution that is invested in your Personal Retirement Bond will depend on the allocation rate applied. 

This is the percentage of your money that is used to buy units in your retirement bond. Any remaining amount not invested constitutes a charge. 

You can discuss the options available with one of our financial advisors and decide which is the most suitable for your needs.

Early Exit Fee

Personal Retirement Bonds are typically designed with a minimum period of five years and are built for medium- to long-term investments. 

If you choose to move your money or use your benefits before you’re ready, there may be an early exit fee. The policy schedule will make such a charge obvious if it applies.

Policy servicing fee

There may be a fee associated with policy servicing. If such a fee is applicable, it will be clearly stated in your policy schedule.

When must I decide to purchase a Retirement Bond?

After leaving a company pension, you have up to two years to move your money to a Retirement Bond. 

You can still transfer to a Retirement Bond after the two-year window has passed, but you will need the trustees of the pension to consent.

What to do if I have pension funds from the past but can’t find them?

Often, individuals accumulate pension savings from various employers over their careers, leading to scattered funds across different pension schemes. 

Pension tracing involves the process of locating and potentially consolidating these scattered pensions into a unified plan, such as a PRB.

We recognize the significance of pension tracing in helping individuals secure their financial futures by locating their pension funds. 

With the expertise and resources needed to navigate complex pension landscapes, we are here to guide you in making informed decisions for your retirement planning.

Additionally, you can read our article to find out more about how you might increase your retirement income by finding lost or forgotten pension funds.

Set up your PRB with True Wealth

Establishing your Personal Retirement Bond (PRB) is a seamless process with True Wealth.

Our skilled team specialises in retirement planning, and we’re here to support you at every stage, ensuring a straightforward process and placing your financial future in capable hands.

We are also experts in personal and business protection, savings and investments, pension tracing, personal and business financial planning, mortgages, and wealth extraction.

Take control of your retirement journey and trust True Wealth to guide you!

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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.

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