Q&A:Q I TOOK early retirement in 2001 and have been in receipt of a reasonable pension since then. I subsequently returned to part-time employment and opened a PRSA.

I am now retiring "properly" and have been sent a statement of options in relation to the PRSA. I note that I can take a tax-free lump sum and then a pension. However, the pension is guaranteed for only five years by this company and that seems very little compared to the amount in the fund.

Would I do better to withdraw the amount and reinvest in another ARF?

Ms J.W., Dublin

A Annuity rates - the figure that determines how much retirement income a pension fund will yield - always come as a rude awakening to those on the verge of retirement. These rates, in general, have declined over the past decade although, with bond yields improving at the moment, there should be some respite this year.

The situation you outline is, in fact, an annuity scheme - after you withdraw the 25 per cent tax-free lump sum - not an ARF (approved retirement fund).

You point out that you already have a reasonable pension dating back to 2001. On that basis, it may well be that you do not need to lock in a defined income on the Personal Retirement Savings Account (PRSA).

You don't run through all the options presented in the "statement of options" ahead of your impending retirement, but I would be surprised if it wasn't possible to move the funds to an ARF - either with the current provider or someone else. There is nothing

obliging you to stay with your PRSA provider when opening an ARF, something financial institutions may sometimes be coy about letting you know.

ARFs have the advantage of allowing you to retain control of your money and permitting you to keep it invested until such time as your circumstances dictate that you need to draw it down.

To open an ARF, you need to have either a guaranteed annual pension income of €12,700 or a minimum pension fund of €63,500.

It sounds as though you are likely to qualify under the first of those conditions on the basis of your current pension.

Given that you only opened your PRSA since 2001, that fund may not have hit €63,500, but as long as you meet one of the conditions outlined above, you are entitled to hold an ARF.

You cannot simply withdraw the money now and "reinvest" in an ARF. Withdrawing the money would trigger a tax charge at your highest income tax rate. The transfer to an ARF needs to be done by the institution holding your PRSA.

I suggest you consult a financial adviser about your options. At retirement, financial planning assumes greater importance as earnings disappear. It is worth taking the time to get it right.

Q I have in excess of €50,000 in an investment share account in Irish Nationwide.

I left it there on the assumption that I would gain considerably in the event of a demutualisation and subsequent acquisition. I am now being told that all I can expect is the "windfall" sum irrespective of the number of shares I hold. Will I not benefit from the acquisition if and when it comes, or should I take most of the money out and invest it elsewhere?

Mr T.O'B., e-mail

A A lot of people are waiting on tenterhooks for the long-promised demutualisation of Irish Nationwide. Unfortunately, having waited years for the Government to bring in the necessary legislation, the society spent a bit too long chasing the premium it felt it was worth from bidders, only to have its plans fall victim to the credit crunch and the downgrading in valuations for Irish financial services companies.

However, the intent is still there.

But if and when Irish Nationwide does demutualise and sell itself off, there was only ever going to be one windfall payment per person in respect of savings at the society - regardless of how many accounts you hold - as long as the accounts are share accounts rather than simple deposit accounts.

Mortgage holders who are also savers at the society might find themselves eligible for a second windfall.

Whether you have €50,000 or €500,000 in such an account will not alter the size of the windfall you receive. It is not like a standard listed company where people hold differing numbers of shares.

Before you move money out of your account, check the threshold you need to remain above in order to retain eligibility for a windfall.

In recent years, that threshold has been €20,000, although it will be lower for older accounts. The society secretary will be able to guide you on this.

In a recent reply in your column, regarding awards by the Personal Injuries Assessment Board, you stated that such awards were not taxable.

One of the Revenue leaflets (IT13) states that awards may be taxable in certain cases. IT13 is dated March 2004. Has the tax situation changed since then?

Mr C.C., Dublin

A The original correspondent, who I think may have been you, had received compensation from the Personal Injuries Assessment Board (PIAB, now known as the Injuries Board) following a road-traffic incident.

I said at the time that such awards were not taxable.

Following your query in relation to the Revenue document, I have reverted to the Injuries Board and it assures me that its awards are not taxable.

However (isn't there always a "however"?), it does appear that, unless certain strict criteria are met, income derived from the investment of such awards will be taxed.

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Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2 or by e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering questions. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.