When you leave a job, figuring out what to do with your pension can feel like a big decision. Instead of letting your savings sit in your old employer’s pension plan, you might consider moving them into a Personal Retirement Bond (PRB).
A PRB gives you more control over your pension savings, letting you decide how your money is invested and managed as you plan for retirement on your own terms.
What’s a PRB?
A Personal Retirement Bond (PRB), also known as a Buy-Out Bond or Transfer Bond, is basically a pension wrapper. If you’re leaving a job and you’ve got pension savings in your old employer’s scheme, a PRB gives you the option to move that pension pot into something you own and control.
You shift your pension savings out of your old employer’s scheme into a plan that’s yours. You’re no longer tied to the old employer or trustees.
Why might you use one?
Here are some situations when a PRB could make sense:
- If you leave employment and you still have pension savings tied up in that employer’s pension scheme.
- If the pension scheme is winding up, and you want to preserve your savings.
- If you just want more control over how your pension savings are invested and when you access them.
What are the benefits of a PRB?
Here are the positives:
- Independence: Once your money’s in the PRB, you don’t have to deal with your old employer or scheme trustees anymore.
- Control: You own the PRB; you decide how the money is invested (within whatever options your plan gives) and when to take your benefits (within the rules).
- Tax-free growth: While your money sits in a PRB, it grows without being taxed (until you take benefits), which can help your savings grow more effectively.
- Flexibility at retirement: When you eventually retire, you’ll have the same benefit choices (e.g., tax-free lump sum, income for life, leaving funds invested) that your original pension scheme offered.
- Death benefit: If you die before taking retirement benefits, the value of the PRB is paid out to your estate.
How a Personal Retirement Bond Works
When you leave a job that had a company pension, you have a few options for what to do with your pension pot. One of those options is to move your savings into a Personal Retirement Bond (PRB), a pension plan in your own name. Here’s what that means in practice:
Taking Your Pension with You
Your existing pension savings are transferred from your former employer’s scheme into a PRB that belongs entirely to you. Once that’s done, you no longer rely on your old employer or the scheme trustees, you’re in charge.
Choosing How to Grow Your Money
With a PRB, you decide how your money is invested. You can go for lower-risk options, take on more growth potential with higher-risk funds, or strike a balance that matches your comfort level and goals for retirement.
Enjoying Tax Benefits
Your money can grow tax-free while it stays in your PRB, giving your savings more room to build over time. And when you retire, you can take a tax-free lump sum from your fund (within Revenue limits).
Having Flexibility for the Future
A PRB gives you more freedom around retirement. You can access your funds from age 50 (or earlier if you retire due to ill health), and you’ll have several choices for how to take your benefits, whether that’s a lump sum, regular income, or a mix of both.
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