A Personal Retirement Bond (PRB), commonly known as a Buyout Bond, offers flexibility for those leaving an employer pension scheme. It allows you to transfer your accumulated pension benefits into a PRB, giving you more control over your investment choices and retirement timeline. At Smart Financial, we specialise in tailoring PRBs to your unique financial goals, helping you understand if this option aligns with your retirement plan.
A PRB holds the pension benefits you built up with a previous employer. Once the transfer is made:
Note: If you take tax-free lumpsum through salary & service rule, The balance of the pension must then be used to purchase an annuity and, once an annuity is set up it cannot be reversed.
A PRB is worth considering if:
It is not always the right choice. Some pension schemes contain features that are lost on transfer – and once you transfer, you cannot reverse the decision. (Our advisor will carefully review the benefits available under your employer’s scheme and provide tailored guidance on whether it may be more suitable to retain the existing arrangement or transfer to a PRB, based on your individual circumstances.)
Guaranteed annuity rates. Some older schemes – particularly those set up in the 1990s and early 2000s – include a right to convert the fund to a guaranteed income at a rate that was written into the original contract. Annuity rates today are considerably lower than those historical rates. If your old scheme has a guaranteed annuity rate, the income it would produce at retirement may be worth considerably more than what you could achieve by transferring to a PRB and purchasing an annuity at current rates.
If any part of your old scheme is defined benefit – meaning it promises a specific income in retirement rather than a pot of money – transferring it to a PRB converts that promise into a transfer value. That value may be lower than the actual benefit you would have received.
Some schemes charge a fee for transferring out, particularly if you leave within a certain number of years. The timing of a transfer can sometimes avoid these penalties entirely.
Annual management charges on PRBs typically range from 1% to 2.45% depending on the provider and fund. On a significant fund value, the difference between a well-chosen and a poorly chosen provider compounds materially over time.
Many people transfer without reviewing their scheme documents. We can go through your old pension before you make a decision.
When you leave an employer pension scheme, a PRB is one of several leaving service options. The others are:
Each has different implications for charges, investment control, and flexibility. The right choice depends on what is in your old scheme, where you are going next, and your broader retirement picture.
A client in their late 40s had four separate pension pots from previous employers, with a combined value of around €110,000. Three were straightforward defined contribution arrangements with no guaranteed features. The fourth had a guaranteed annuity rate built in.
The adviser recommended transferring the three straightforward pensions into a single PRB – simplifying management, reducing overall charges, and bringing the investment strategy under one review. The fourth was left in place to preserve the guaranteed annuity rate.
This is an illustrative example. The right approach for your situation depends on the specific features of each pension you hold.
A Smart Financial consultation covers your existing scheme documents, the options available under your leaving service letter, and a clear recommendation on whether a PRB makes sense for your situation.
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Smart Financial Insurance Limited trading as Smart Financial is regulated by the Central Bank of Ireland. The value of your pension investment may go down as well as up.
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Yes, PRBs can consolidate pension funds from previous employers, making it easier to manage your retirement savings. Smart Financial can help you combine your pensions for streamlined management.
Your PRB remains accessible even if you leave Ireland, but tax implications may vary. Our advisors can explain how moving abroad affects your PRB.
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