Leaving AIB? What are the options for your pension?
AIB, already under fire from its retired employees and trade unions over a unilateral decision to stop increasing staff pensions in line with inflation, was last week seeking further voluntary redundancies to bring the total number expected to leave the bank to close to 200 by the end of the year. Read more in Irish Times article.
Managers who are approved for the redundancy package are expected to leave the bank on a phased basis during October and November 2017.
The union’s fury at the removal of the discretionary increases is aggravated by the fact that the decision wiped more than €1 billion from the bank’s liabilities ahead of the recent stock market flotation.
This activity is not now unusual for companies that have seen major deficits developing in their Defined Benefit pension schemes.
As a result over 210,000 members of Company-backed Defined Benefit pension schemes in the UK have accessed around £50 billion as transfer values from their Defined Benefit Schemes in the last twelve months.
Deferred pension scheme members are preferring to take control of their pension funds personally in the future. Fears that Defined Benefit pension schemes may be unable to meet their liabilities is driving a demand for pension holders requesting to transfer their benefits out of their ex-employers pension schemes.
The 2015 introduction of ‘pension freedoms’ by the UK government have now been mirrored to some extent by changes to Irish pension legislation introduced by ex-Minister of Finance Michael Noonan on 22 June 2016. As a result deferred members of Irish Defined Benefit schemes who transfer their preserved pension benefits to a Personal Retirement Bond can now access 25% of the fund as a tax free lump sum (subject to total lifetime limit of €200,000) and transfer the balance to an Approved Retirement Fund (ARF).
With deficits rising in many pension schemes, it is probable that many ex-employees of major companies will look to take control of their own pension funds and this has certainly been our experience in the last twelve months.
Find out more about how this works and then contact us if you want to have a chat about your options:
With AIB already signalling its intention to severely reduce staff numbers going forward, staff will be watching the early retirement space closely to consider their options.
If you have left or are leaving service with AIB and have concerns about the future of your pension benefits, contact us today and let’s have a conversation about how you can turn this into an opportunity and put your mind at rest.