Personal Retirement Bond in Ireland

Pension & retirement

24 April 2024


A Personal Retirement Bond (PRB), also known as a Buy-Out Bond, is a pension plan managed by a company’s trustees for employees leaving the company. It lets individuals keep control of their pension savings when changing jobs or exiting a pension scheme.


Firstly, with people living longer, building a substantial pension fund is crucial to avoid financial insecurity in later years. Retirement Bonds offer individuals control over their pension pot, eliminating the need for consultation with pension trustees. Additionally, the flexibility of investment choice ensures alignment with individual risk tolerance and objectives.

Moreover, Retirement Bonds provide tax benefits, with funds growing tax-free and the option to draw a tax-free lump sum upon retirement. This financial tool empowers retirees to fulfill aspirations and enjoy a comfortable retirement. In summary, starting a Retirement Bond is a proactive step towards securing financial stability and peace of mind during retirement.


Benefits of a Personal Retirement Bond (PRB)

  1. Flexibility: PRBs allow individuals to customise their retirement savings plan according to their needs by offering flexibility where you can access these funds from age 50 without needing to drawdown any other pension pots you may have. A PRB will also allow the flexibility to choose from a wider range of funds that you may not have in an occupational pension scheme.
  2. Professional Management: PRBs are managed by investment professionals, ensuring optimal returns while minimising risk.
  3. Portability: PRBs are portable, enabling individuals to change provider if needed unlike with an occupational pension arrangement
  4. Control: PRBs provide individuals with control over their retirement savings, allowing them to choose investment strategies and monitor fund performance.


Comparison with other retirement savings vehicles

Each scheme caters to different needs and preferences, offering varying levels of flexibility, control, and tax efficiency.

Personal Pensions
  • Suitable for the self-employed or those without employer-provided pensions.
  •  Offers flexibility tailored to individual lifestyles.
PRSA Pension
  • A flexible and portable pension regardless of employment status.
  • Contributions can be made at any time, and the plan can be taken from one job to another.
Retirement Bond (PRB)
  • Enables the transfer of pension benefits when leaving a pension scheme.
  •  Offers flexibility and tax efficiency, allowing control over investments.
Executive Pension
  • Geared towards company directors and owners.
  •  May include Additional Voluntary Contributions (AVCs) for building additional retirement funds.
Self-Directed Pension
  • Suitable for experienced investors wanting to manage their pension fund investments themselves.
AVCs (Additional Voluntary Contributions)
  • Extra contributions made alongside existing company pensions.
  •  Provides an opportunity to boost pension funds before retirement and offers tax efficiency.


Tax advantages and implications for PRB

Upon retirement, you have the option to receive a tax-free lump sum from your PRB. This lump sum can either be 25% of your fund or, based on your salary and service, up to a maximum of 150% of your salary. The maximum tax-free lump sum allowable is €200,000. The remaining balance of your fund can then be invested in an Annuity or an Approved Retirement Fund (ARF).


Potential pitfalls and risks associated with PRBs

A Personal Retirement Bond operates similarly to other investment vehicles, with its value subject to market fluctuations. When establishing your PRB, you have the flexibility to select a risk level aligned with your risk tolerance and investment objectives. Higher risk levels offer greater profit potential but also entail a heightened risk of loss.


The regulation of risk levels and their availability to customers is rigorously overseen at the EU level, with oversight from the Irish central bank. The European Risk Rating provides a comprehensive depiction of risk on a sliding scale, enabling investors to grasp both the potential rewards and pitfalls associated with higher risk. By leveraging this rating, potential investors can make well-informed decisions regarding the level of risk they are comfortable assuming with their personal retirement bonds.


Planning for your retirement is crucial to sustain the lifestyle you envision for your post-career years. Starting the planning process early offers numerous benefits, but regardless of your career stage, seeking guidance from an independent pension advisor can significantly enhance the value of your retirement and ensure stability.

Fairstone’s pension advisors possess extensive expertise to help you make informed decisions and identify opportunities within the pensions market tailored to your unique circumstances. They will take the time to understand your financial needs, risk tolerance, and ultimate goals, guiding you through the fundamental elements of investing and ensuring you comprehend the implications involved. With their assistance, you can create a diversified range of investments within your Buy-Out Bond, spreading your funds in a manner that aligns with your needs and expectations for risk and return. Your Fairstone pension advisor will provide personalised guidance at every step of the process, empowering you to optimise your retirement planning journey.


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