Employees who leave their job and were a member of their employer’s pension scheme should receive from the Trustees of the scheme a document called “Leaving Service Options”.

This sets out the options available to the member, who must decide what to do next.

Most people have the following Options:

  1. Leave the cash in the existing pension scheme and take a deferred pension at normal retirement age.
  2. Transfer the proceeds to your new employer’s pension scheme I if applicable and the Trustees of that scheme agree to take the transfer.
  3. Depending upon your service, you may be entitled to take a refund of your own contributions less income tax.
  4. Transfer the cash to a personal retirement bond.

In many cases, departing employees do not make any decision and their pension money remains with the former employer’s scheme – this is called the default option and the benefits within the pension scheme are called ‘preserved benefit’.

This is an unsatisfactory situation for both parties.

The employer still retains responsibility for the investment; statutory returns to the Pensions Board and Revenue Commissioners; providing an annual benefit statement to the member and paying out the retirement benefits.

The member does not control the investments; has no say on taking retirement benefits, except at normal retirement age; will depend on the former employer for information and run the very real risk that the pension fund might become insolvent.

The biggest problem however, is trying to access your pension benefits where the employer has long gone out of business or where the original business has been taken over on numerous occasions.

You will have to try to identify the Trustees of the pension fund or trace the original directors or business owners – that could be a nightmare. Payment of pension benefits could well be delayed for a year or more and the cost of will impact the value of your funds.

An easy solution is to transfer your pension to a personal retirement bond.