Let’s start with a reminder that all individual situations are different, and financial advice will vary according to your unique needs and requirements.
How does your pension fund look? It may be something that you don’t consider very important at this stage in your life, but a little forethought now can make a big difference to you and your family when you reach retirement age.
You may have been paying into a company pension scheme for many years, and this often means you have little control over your funds. When you move on, you may not realise that you have options regarding your retirement savings. However, if you’ve ever changed jobs, been made redundant or left a previous pension behind, you might want to consider setting up a Personal Retirement Bond (PRB), which is also known as a Buyout Bond.
If you have recently left an employed job or are planning to leave, or if you have been made redundant, you may be able to move your pension out of a company scheme and into a personal arrangement, and a PRB is one option that allows you to do this. We’ll take a closer look at PRBs here.
Why Choose a PRB?
The options surrounding pensions can be overwhelming, and your unique situation will determine the best options for you. PRBs can, however, be a very good option for many people, and here’s why:
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You are in control.
When you have a PRB, you control your pension. This means that it is not left behind in a scheme you are no longer contributing to, so you are not tied to the rules and restrictions that apply to a company you no longer work for. There are many options to choose from, and we can help you to find the best option for your situation.
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You have more flexibility.
A PRB gives you much more autonomy, enabling you to choose how your money is invested. You can match your risk profile to your own preferences and set long-term goals that are relevant to you and your lifestyle, giving you far more control than most company schemes will offer.
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You may have earlier access to your funds.
Most company pension schemes have a set retirement age of 65. A PRB, however, may allow you to access your pension from the age of 50. This will depend on several factors and you should aways seek personalised advice before making important financial decisions.
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You can make use of death benefits.
Although it can be hard to think about the worst-case scenarios, planning for your family to be provided for in the event of your death can give you peace of mind. In the event of death before the age of retirement, the value of a PRB can be passed on to the beneficiaries in your will, potentially with favourable tax treatment, depending on your circumstances.
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You can consolidate multiple pensions.
If you have worked with several different companies over the years, it is likely that you have accrued several pension pots and this can feel confusing and messy. A PRB enables you to consolidate these, which makes it much easier to manage and monitor your overall financial situation and your retirement savings.
Who Can Use a PRB?
Anyone who has ever left a pension scheme can use a PRB. This is a really good choice for:
- Anyone changing or leaving jobs
- Anyone who has been made redundant
- Anyone who wants more control of their retirement savings.
Many people do not realise they can transfer their pensions when they leave an organisation, and this means that pensions are often left untouched for many years. Consolidating these into a PRB enables you to take control of these funds and ensure that you are maximising the benefits of your retirement savings.
What are the Negatives of PRBs?
The costs associated with PRBs must be considered, as these tend to carry slightly higher annual management charges than company schemes. However, the flexibility and the potential for better growth will usually outweigh the difference in costs, making a PRB a better option for you overall.
Understanding your options will put you in a good position to make decisions based on your own goals, risk tolerance and financial situation.
Is a PRB for Me?
A PRB is not a universal solution, but it is a very good choice for many people. It can provide clarity, control and confidence in your retirement planning, and this is invaluable.
If you would like to explore whether a PRB could work for you, please feel free to get in touch. Our experienced team at Oaktree have many years of experience and we will be happy to take a look at the options with you.
Tracy Sumstad is a highly qualified and experienced Senior Financial Consultant with over 20 years of expertise in the Finance Sector. Tracy is well-equipped to provide comprehensive advice on financial planning and corporate solutions. Her focus lies in helping clients identify their unique values and goals, empowering them to make informed financial decisions that protect and enhance their wealth and success.
