Planning for retirement is one of the most important financial decisions you’ll make in your lifetime. A Personal Retirement Bond (PRB) is a powerful tool that can help you secure your financial future. Whether you’re changing jobs, retiring, or simply looking to take control of your pension savings, a PRB offers flexibility, tax efficiency, and a range of investment options. In this guide, we’ll explore what a PRB is, how it works, and why it might be the right choice for your retirement plan.
A Personal Retirement Bond (PRB) is a type of pension product designed to help individuals manage their retirement savings when they leave an employer-sponsored pension scheme. It is particularly useful if you have accumulated benefits in a defined contribution pension and want to transfer them into a more flexible and personalised arrangement.
A PRB is essentially a buy-out bond that allows you to take your pension savings with you when you change jobs or retire. It is a standalone pension plan that gives you full control over your retirement funds, including how they are invested and when you access them.
When you leave an employer-sponsored pension scheme, you typically have several options for your pension savings. One of these options is to transfer your funds into a Personal Retirement Bond. Here’s how it works:
Your existing pension savings are transferred from your employer’s scheme into a PRB in your name.
You can choose how your funds are invested, with options ranging from low-risk to higher-risk investments, depending on your risk appetite and retirement goals.
PRBs offer significant tax advantages, including tax-free growth on your investments and the ability to take a tax-free lump sum at retirement.
Unlike some pension products, a PRB allows you to access your funds from the age of 50 (or earlier in cases of ill health) and provides options for how you draw down your retirement income.
With a PRB, you have full control over your retirement funds. You can choose your investment strategy, adjust it as your circumstances change, and decide when and how to access your savings.
PRBs offer several tax benefits, including:
A PRB allows you to access your funds from the age of 50 (or earlier in cases of ill health). You can choose to take your retirement income as an Annuity, an Approved Retirement Fund (ARF), or a combination of both.
If you change jobs or move abroad, your PRB stays with you. This makes it an ideal solution for individuals who want to consolidate their pension savings into a single, manageable plan.
One key advantage of a PRB over a group pension scheme is the treatment of assets in the event of death before retirement. Under a group pension scheme, trustees can only pay out a lump sum of up to four times the member’s salary at the date of death, plus the value of any employee contributions. Any employer contributions must be used to purchase an annuity or be invested in an Approved Retirement Fund (ARF), from which income is then taxed.
In contrast, with a PRB, the full value of the pension fund can be paid entirely tax-free to a surviving spouse, offering a significant financial advantage and greater flexibility for estate planning.
A PRB is an excellent option for individuals who:
When planning for retirement, it’s important to understand how a PRB compares to other pension products, such as an Approved Retirement Fund (ARF), an Annuity, or a PRSA pension.
Setting up a PRB is a straightforward process, but it’s important to seek professional advice to ensure it aligns with your retirement goals. Here’s a step-by-step guide:
Review your existing pension savings and determine if a PRB is the right option for you.
Select a reputable pension provider to set up your PRB.
Arrange for your pension savings to be transferred from your employer’s scheme into your new PRB.
Work with your pension advisor to choose an investment strategy that matches your risk tolerance and retirement goals.
Decide how you want to access your funds at retirement, whether through an annuity, an ARF, or a combination of both.
Retirement planning is a complex process that requires careful consideration of your financial goals, risk tolerance, and tax situation. Seeking professional advice is crucial to ensure you make informed decisions that align with your long-term objectives. A Personal Retirement Bond is a versatile and tax-efficient pension product that offers flexibility, control, and portability. Whether you’re changing jobs, retiring, or simply looking to take charge of your pension savings, a PRB can help you achieve your retirement goals.
At Fairstone, we provide expert pension advice to help you navigate the complexities of retirement planning. Our team of experienced advisors can assess your current pension situation, recommend the best course of action, and help you set up and manage your PRB. By choosing Fairstone, you’re not just planning for retirement – you’re investing in your future. Book a no-obligation retirement planning consultation today to start planning for a secure and comfortable retirement.
Updated 2nd April, 2025
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