What is a Personal Retirement Bond?
A Personal Retirement Bond – or as it is sometimes referred to as a Buy-Out Bond – is a retirement bond which can receive a transfer of a pension fund from a former employer, or if your current employer is winding up their company pension scheme.
Once the trustees of the pension scheme transfer your pension fund value into your PRB you become the sole owner of the fund. This allows you to take complete control of your retirement fund allowing you to manage and invest it as you wish. If you pass away before you retire the value of your PRB is paid to your estate.
When you retire
On retirement you can use the value of your PRB in several ways depending on whether the original pension was part of a Defined Benefit/Defined Contribution Pension scheme or if you were a 5% director in the company which the pension fund came from.
All of the usual retirement vehicles are available for PRBs, including Approved Retirement Funds (ARF), Annuity and also 25% of the fund as tax-free cash. In the case of a Defined Benefit’s value being transferred to a PRB or a company director with at least 5% shareholding in the company from which the fund came, these groups may be able to avail of a tax free cash lump sum based of 150% of their final salary.