Cashing in pension in early 40s
I have been on reduced pay since the coronavirus crisis kicked off. I have a defined contribution pension through work. I’m wondering if I can take money out of my pension to help me get through the coming weeks or months. I am 44. Joanna, Co Kildare
Unfortunately, you cannot access your defined contribution pension as a 44-year-old.
The term used to access pension funds is ‘pension liberation’. As the name indicates, pension liberation means liberating your pension funds by accessing them early.
In Ireland, the only reason you might be able to gain access to a pension ahead of retirement is due to poor health, such as that caused by a long-term disability.
Otherwise, you are required to wait until you are 50 before you can access your pension funds in the case of an occupational pension scheme – or 60 in the case of a Personal Retirement Savings Account (PRSA) or personal pension plan.
The reason for this is that the Revenue Commissioners grants you tax relief at your marginal tax rate as an incentive to you to save for retirement – and not for accessing these funds ahead of time.
From experience, people sometimes mention that they heard of access in the past. This is correct. For three years from March 2013, the government granted a once-off access to up to 30pc of Additional Voluntary Contributions (AVCs) made to a pension, but this option is no longer available.
Finally, you mention reduced pay as a result of the coronavirus crisis. The Government have been very proactive from early in this crisis to provide support for such a scenario.
Your employer would qualify for the Covid-19 wage subsidy scheme if it is unable to pay normal wages and normal outgoings fully.