A Personal Retirement Bond (PRB) is a pension plan set up in your own name, usually to receive a transfer of the fund in your company pension scheme.
While some people are comfortable leaving their fund in the company’s pension scheme to be managed by the trustees of the scheme, others opt to remove their fund from the scheme to avail of the additional control available when establishing a PRB.
As a PRB is a pension in your own name; once it is set up you can decide on the investment strategy within the PRB in conjunction with your financial advisory firm. You can typically take retirement benefits from the PRB between the ages of 50 and 70, so a key consideration in constructing your investment strategy is often the likely date at which you will draw your pension benefits. If you have a longer time period until your retirement age you might be more accepting of short-term investment volatility and therefore opt for a higher risk investment fund with the capacity for higher returns.
Another driver of the makeup of your PRB portfolio is the level of investment risk you are willing to take. You will be able to select from a range of low to high risk investment funds. Your advisory firm should be able to explain the relationship between investment risk and return; and help set expectations as to the likely investment experience within your selected fund.
What are my options when taking retirement benefits from a Personal Retirement Bond?
At retirement you have a couple of options as to how to draw down your PRB pension. The first option is to take a maximum retirement lump sum of up to 1.5 times your salary; and use the rest of the fund to buy a guaranteed pension for life – known as an annuity.
The second option is to take a retirement lump sum of 25% of your retirement fund. In this scenario the rest of the fund (75%) can be invested in a post-retirement pension fund known as an Approved (Minimum) Retirement Fund. Your A(M)RF becomes a source of retirement income to supplement any other private or state pension entitlements you might have.
How Should I invest my Personal Retirement Bond?
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