Post Retirement
Post Retirement
We believe that Approved Retirement Funds (ARF’s) should be transparent, in terms of offering maximum investment allocation, with a low annual management charge (AMC) to give you the best long-term value.
Our comprehensive ARF advisory services, offer a full market comparison to clearly display the best value options to suit your financial requirements.
Post Retirement
Our bespoke ARF investment solutions involve the construction of diversified client portfolios, spanning several asset classes and investment managers, and include the full implementation and monitoring of a long-term critical plan. .
Post Retirement
An ARF allows you to invest all, or part of your pension fund after you retire. You can decide on the type of fund you would
like to invest in together with the amount of risk you’re comfortable with.
With an ARF you can withdraw as much as you wish, should you ever need to, with a minimum annual withdrawal amount
that is dependent on your age.
Once you have taken your minimum withdrawal, you can take any additional income as you need it. Any withdrawals you
take from your ARF will be subject to income tax, the Universal Social Charge, and PRSI (if you are liable for this).
PRSI is no longer payable after age 66 and the USC rate reduces from age 70. The investment firm holding your investment will make
these deductions at the source prior to transferring payments to your bank account.
Questions & Answers
All you need to know in regards to your approved retirement funds.
An Approved Retirement Fund or ARF is a post-retirement investment plan, where you can invest all or part of your pension fund after taking your tax-free lump sum on pension plan drawdown, including early retirement. You can withdraw from it regularly to give yourself an income, on which you pay income tax, PRSI, and Universal Social Charge (USC). Any money left in the fund after your death can be left to your next of kin.
ARF is available to members of an Occupational Scheme (assuming scheme rules allow) and individuals that hold a Personal Pension, Personal Retirement Savings Account (PRSA), or Retirement Bond and have reached Normal Retirement Age, taken Early Retirement. They are also available to those aged 50 plus who have past employer pension scheme benefits.
Before you can invest in an ARF, you must satisfy the income test. The test is that you must have a guaranteed pension annual income equal to €12,700 as at January 2016. This includes a pension or annuity that is guaranteed to be payable for the rest of your life, including any State guaranteed pension. If you do not satisfy the income test you can still purchase an ARF on the condition that you also purchase an Approved Minimum Retirement Fund (AMRF).
The test does not apply to individuals aged 75 or over, who may invest in an ARF without satisfying the guaranteed income or AMRF requirements.
No. An ARF is a post-retirement product that is designed to provide an income for you in retirement. It can only accept transfers from existing pension arrangements.
The only assets which can be transferred into your ARF/AMRF are:
The value of retirement benefits not taken as a lump sum at retirement, arising from a defined contribution occupational pension scheme or defined benefit scheme (subject to certain restrictions).
The value of Additional Voluntary Contributions (‘AVCs’) at retirement not taken as a lump sum.
The value of a Retirement Annuity Contract (‘RAC’) or Personal Retirement Savings Account (‘PRSA’) or Retirement Bond not taken as a lump sum.
The value of assets transferred from another ARF/ARMF held by you (or your deceased spouse).
The value of pension assets transferred to you under the terms of a court order.
There is a minimum income you must take from your ARF each year, which is dependent on your age. If your ARF is under €2 million, you must withdraw:
4% of the value of your fund, if you are over 60.
5% of the value of your fund, if you are over 70.
If your ARF exceeds €2 million, you must take out 6% of the value of your fund each year.
Once you are over age 60 and have taken your minimum withdrawal, you can take any additional income as you need it. If you are under age 60 there are no minimum nor maximum withdrawal limits.
An AMRF is treated slightly differently. The maximum income you can take is 4% of your AMRF each year.
This imputed distribution is applicable to ARF holders who are 60 or over for the full tax year. Actual distributions made during the year from the ARF may be deducted from the imputed distribution to arrive at the net imputed amount, if any, to be regarded as a distribution.
Your ARF can pass to your spouse tax-free! If left to your children and they are aged under 21 inheritance tax at 30% may be payable on any benefit above their CAT tax-free threshold. If left to your children aged over 21 then 30% income tax is charged.
Yes, the full current value of your ARF is available to transfer to another ARF provider. Depending on who that provider is and how long you are with that provider an exit charge may occur and usually in the first 4-5 years.
Typically a broker or advisor may charge a once-off set-up fee, especially if more than one source of transfer is occurring. After which, a single annual charge will be levied against your total ongoing ARF fund value known as the AMC or annual management charge.
It pays to shop around as AMC’s typically vary between 1.00% and 1.5% PA depending on your choice of funds and choice of a financial advisor.
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One Quote Financial Brokers,
11 James’s Terrace, Malahide,
Co. Dublin, K36 CV08
One Quote Financial Brokers Ltd t/a One Quote is regulated by the Central Bank of Ireland no: 459006.
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