Your queries answered by DOMINIC COYLE

Can I get my hands on part of my pension?

Q

I am a 40 year-old, self- employed person, who has been contributing to a pension operated by Bank of Ireland Asset Management. Obviously, the fund value has dropped and, as of today, the fund value is slightly less than the total of the contributions I have made on an annual basis over a number of years. I now need to access funds in order to repay some debts.

I wanted to be able to withdraw half of the fund value and pay whatever taxes and penalties to Revenue so that I can use this money to repay debts. Is this possible?

- Mr JH, e-mail

A

No, it’s not. There are very strict rules about access to pension funds, driven in part by the generous tax relief that contributions attract. The quid pro quo for the tax relief is that the funds are locked in until retirement.

There is limited early access in an occupational pension scheme – but only in the first two years of membership – and this does not extend to personal pensions.

The earliest you will be able to access the funds, subject to the scheme rules, is when you turn 50.

Quite apart from anything else, I am reminded of the advice given by one senior industry professional who noted that the time to get out of such funds is, as a rule, long before anyone realises that a problem is upon them. In your case, the funds have already lost all their investment gain of recent years. Even if you could access your money, you would simply be locking in those losses.

Stock markets continue to be volatile and there is no guarantee of the scale of any eventual recovery, but a recovery there will be. Markets, like the economy in general, run in cycles. If the rules of your scheme allow, and you so wish, you could simply reduce your contributions for the moment. However, with changes in tax relief flagged by the previous government and the current Minister for Social Protection hinting broadly that they may still occur in order to meet the requirements of the troika bailout assessment teams, this year might be the time to maximise your input in order to avail of the current relief.

What happens if the euro disappears?

Q

I am retired and have all my savings in funds with leading companies such as Zurich, Standard Life, etc. If the euro disappears, will these funds become worthless?

And if I decide that the euro is definitely going to collapse, would I be right to cash in my funds immediately and buy gold bars and store them under the bed?

- Mr MM, Dublin

A

The funds will not become worthless on the basis of any collapse of the euro as a currency. Irish funds, like yours, were obviously around when we made the switch into the euro and they simply converted from punts to euro at the set rate on the changeover day.

If, for any reason, however unlikely, that the euro were to disappear, the funds would be transferred into whatever new currency takes over from it at the exchange rate agreed on its introduction.

If you were certain of the euro’s collapse, getting your money out of the currency would hedge against losses but that’s a very risky call on an event that is unlikely in Ireland’s case.

This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2. E-mail: dcoyle@ irishtimes.com