When you retire, you can usually take a part of your pension fund as a tax-free lump sum. Depending on your circumstances, you will be able to choose what you want to do with the rest of your fund.

If you are retiring from a Personal Pension or PRSA, or as a Proprietary Director (who controls more than 5% of the company) you can choose to buy an Annuity or invest in an ARF or AMRF.

What is an Annuity?

An annuity is a regular guaranteed income for life. The cost depends on factors such as interest rates and life expectancy. All annuity payments are taxable as income.

Benefit

This provides a guaranteed income for life, however the original fund used to purchase the annuity reverts to the insurance company on your death or on payment of the agreed minimum number of guaranteed annuity payments.

What is an ARF?

An Approved Retirement Fund (ARF) gives you control over your retirement fund by providing you with investment choice and the flexibility to take an income which can be drawn down as and when you need it (this is subject to taxation and the terms of the investment option(s) you choose).

Benefits

• Gives you more control over your investments.
• Flexibility to draw down an income as and when you like.
• Income payments are taxable.
• The funds in your ARF are available to your family after your death.

If your guaranteed annual income is under €12,700 at retirement you must take out an Approved Minimum Retirement Fund (AMRF) first. €63,500 of your retirement fund is put in the AMRF and the rest into an ARF.

What is an AMRF?

This fund operates similarly to the ARF but you cannot withdraw (other than any growth achieved on the fund) from it until you reach age 75 – at which point it converts to an ARF.

If you are retiring from a Company or Executive Pension Plan and are not a Proprietary Director you can only choose to buy an Annuity.

We can advise you on every aspect of pension and retirement planning. Talk to us today to ensure you maximise the potential of your pension so that you enjoy your retirement to the full. One of our independent financial advisers can guide you through the most appropriate way to draw from your pension. Call us on 01 639 5536 or email info@brennanpi.ie