Tax-Free Lump Sum

You will have the option of taking part of your pension as a tax-free lump sum. The level of tax-free lump sum which you are entitled to take will depend on the type of pension plan you have and your personal circumstances. Most people opt to take the maximum amount allowed under this option.

Generally, you will be entitled to take 25% of the value of your Personal Pension or Personal Retirement Savings Account (PRSA) fund as a tax-free lump sum.

If you are a Company Director or Employee and you are a member of a Executive or Occupational Pension Scheme, your tax free lump sum entitlements may also be dependent on your salary and service with your company. The maximum retirement lump sum allowed is 1.5 times your final earnings.

The overall tax-free cash from all of your pension arrangements is subject to a lifetime limit of €200,000. Any lump sum payment over this limit will be taxed at the marginal rate of tax up to a limit of €575,000 (as of January 2011).