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.
Each scheme caters to different needs and preferences, offering varying levels of flexibility, control, and tax efficiency.
| Personal Pensions |
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| PRSA Pension |
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| Retirement Bond (PRB) |
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| Executive Pension |
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| Self-Directed Pension |
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| AVCs (Additional Voluntary Contributions) |
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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).
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.
Source – Zurich.ie
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