Employee: Has Pension from Ex-employer

Fiona worked for a large multi-national firm for 13 years, during which she contributed to a company pension fund. She is now in employment with another company and is contributing to their group scheme. Her employer is matching these contributions and she is happy with this arrangement. Fiona’s old scheme is worth €150,000. She is interested in using her pension fund to buy property and has seen a property she is interested in which is valued at €210,000.

In order to facilitate a property purchase through her old pension, Fiona will need to establish a self-administered pension scheme. It is unlikely that she can take a transfer value from her current employer’s scheme, but she does have €150,000 available in her pension from previous employment. Fiona has two options - Establish a self-administered Buy Out Bond (or Personal Retirement Bond) or establish a PRSA. A Buy Out Bond holds a member’s pension proceeds from an occupational scheme, where the member has left service or the scheme has wound up. The Buy Out Bond is held in the member's own name, independent of the occupational scheme. A PRSA can accept transfers from occupational schemes provided the member has less than 15 years’ pensionable service with the sponsoring employer. It can also continue to receive further contributions if the member wishes to fund the PRSA in addition to a current employer scheme.

Once Fiona has established the relevant scheme, she is in a position to purchase a property through her self-administered pension fund. As the property she has selected is costing more than the value of her pension fund, she will need to obtain lending to facilitate the purchase. Pension lending is being granted on a case by case basis. A maximum Loan to Value of 50% is allowable and the loan must comprise of capital and interest repayments. Interest Only loans are not allowable. 

If you are interested in establishing a pension or investing in property with your pension fund speak to your financial advisor.