This complete guide to Approved Retirement Funds (ARFs) is aimed at those approaching or now at retirement, because planning for retirement doesn’t end when you stop working. Once you access your pension, you’ll need to decide how best to draw down your benefits. One of the most popular options in Ireland is an Approved Retirement Fund (ARF).
In this guide, we’ll explain:
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What an ARF is
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When and how you can access it
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The rules around withdrawals and taxation
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The different ARF investment options
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How to manage risk and build a strong portfolio
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What happens to your ARF when you die
What is an Approved Retirement Fund (ARF)?
An ARF is a personal, tax-efficient investment fund into which you can transfer part or all of your pension fund after taking your tax-free lump sum (up to €200,000).
With an ARF, you can:
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Stay invested and grow your retirement fund.
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Choose your own investment strategy and level of risk.
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Draw down a flexible income to suit your lifestyle.
Unlike buying an annuity (a guaranteed income for life), an ARF gives you more control, flexibility, and investment choice—but also comes with investment risk.
When Can You Access an ARF?
Accessing your ARF depends on your pension type and age.
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From age 50: If you’ve left that employment, you may access benefits from an occupational pension scheme, Executive Pension Plan, Personal Retirement Bond, or employer-sponsored PRSA (with consent where required).
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From age 60: Standard access age for a Personal Pension Plan or non-employer PRSA.
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Earlier retirement: Only possible in cases of ill health or certain professions (e.g., sportspeople).
Business Owners
If you’re self-employed or a company director, you can usually access your pension from age 60 without needing to retire from your business.
ARF Withdrawals – Rules You Need to Know
Once your ARF is set up, you can make withdrawals whenever you need—but there are minimum annual withdrawal requirements:
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From age 61: At least 4% per year.
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From age 71: At least 5% per year.
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If total ARFs exceed €2 million: At least 6% per year.
Tip: Setting withdrawals as a percentage (rather than a fixed cash amount) helps preserve capital for longer.
Withdrawals are calculated based on the fund value at 30 November each year.
Taxation of ARFs
All ARF withdrawals are subject to:
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Income Tax
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PRSI (up to age 70 – new rules apply from 2024)
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Universal Social Charge (USC) (reduced rates apply after age 70 if non-state income is under €60,000).
Important 2024 change: If you turn 66 on or after 1 January 2024 and haven’t started receiving the State Pension (Contributory), you will still pay 4% PRSI on ARF withdrawals until age 70.
Types of ARF Investments
When setting up an ARF, you decide how your funds are invested. The main options are:
1. Self-Administered ARF
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Full control to choose stocks, bonds, deposits, funds, ETF’s or direct property.
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Requires an independent trustee.
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Highest costs (set-up, reporting, transactions).
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Best for very experienced investors or high-net-worth individuals.
2. Self-Directed ARF
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Managed through an insurance company or qualified fund manager.
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Access to both in-house funds and external investments.
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Diversification of self-administered, without direct property purchases.
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Watch out for high management and trading charges.
3. Unit-Linked ARF (Standard ARF)
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The most common and cost-effective route.
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Invests in diversified, professionally managed funds.
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Lower fees and simpler to manage.
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Suitable for most retirees seeking balance between growth and security.
Note:
Please note due to their high charging structures and firm belief that most clients can have sufficient control and choice in choosing a fund based unit-linked ARF, One Quote Financial brokers does not offer self-administered or self-directed ARF’s.
Building a Strong ARF Portfolio
Because you’re withdrawing income from your ARF rather than adding to it, choosing the right investment mix is crucial.
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A medium-risk (ESMA 4) portfolio is generally recommended.
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Diversification across asset classes (shares, property, bonds, cash, commodities) helps manage risk.
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Professional portfolio construction blends active and passive funds to reduce volatility.
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Ongoing monitoring is essential—market shocks (e.g., Covid, energy crises) can quickly erode capital.
A good financial advisor should review your ARF regularly and justify their ongoing fee (ideally no more than 0.25% annually).
Passing on Your ARF – Inheritance Rules
When you die, your ARF does not simply disappear—it transfers to your estate. The tax treatment depends on who inherits:
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Spouse: No immediate tax. Withdrawals taxed as income.
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Children under 21: No income tax, but CAT (inheritance tax) may apply.
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Children 21 or over: 30% income tax, no CAT.
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Others (non-spouse/children): Income tax at your marginal rate plus CAT.
Final Thoughts
An Approved Retirement Fund (ARF) gives you flexibility and control over your retirement income, but it also comes with responsibility, tax implications, and investment risks.
The right ARF strategy depends on your:
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Age and retirement goals.
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Risk tolerance.
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Need for income vs capital preservation.
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Estate planning wishes.
Before making a decision, always seek impartial financial advice to ensure your ARF strategy is tax-efficient, cost-effective, and suited to your long-term needs.
For more ARF information
Contact: Ken O’Gorman QFA, SIA, RPA, Chartered Banker – Director – Pensions & Investment Specialist – One Quote Financial Brokers on: 01 845 0049 or call me directly on: 087 665 8516.
