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Frequently Asked Questions
These questions and answers are divided into two options.
Option 1:
Take a tax free lump sum and / or Buy an annuity with the remaining fund.
Option 2:
New retirement plans, the Approved Retirement Fund (ARF) and the Approved Minimum Retirement (AMRF), provide you
with alternative options to buying an annuity.
Can I take a tax free lump sum ?
When your pension plan matures, you can immediately withdraw a tax free lump sum from your fund.
If you have a Personal Pension Plan you can take up to 25% of your fund value. If you are a Proprietary Director
in a company scheme, you can take up to 1.5 times your final pensionable salary.
Having contributed to your pension plan tax free and watched your fund grow tax free, you can now withdraw a significant
portion of your fund tax free.
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What can I do with the balance of the money ?
Buy an annuity
An annuity gives you an income for life. The amount of income you receive depends
on the value of your fund, interest rates at retirement, the type of annuity you want to buy, and your age at retirement.
The major advantage of an annuity is that it provides the security of a guaranteed lifetime
income, which is unaffected by market conditions.
In many cases, buying an annuity is still the most advisable option when deciding how to
use your retirement fund.
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What type of annuity plans are available ?
Your retirement fund can be used to buy an annuity suitable to your particular needs at retirement. You can opt for an annuity that:
- Pays an income for a minimum period, 5 or 10 years, in the event of your early death;
- Increases your income payments each year, by 3% or 5%, to offset inflation;
- Provides an income for your spouse, should they outlive you; or
- Any combination of the above three choices.
Personal Pension plan holders can buy an annuity from age 60 onwards. Proprietary
Directors in a company scheme can do so from age 50 provided they have released their shareholding in the company.
more..
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Option 1 Benefit Summary
- Take a tax free lump sum
- Receive an income for your lifetime
- Provide benefits for your spouse on your death
- Increase your income payments yearly
- Your income is unaffected by market conditions
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What is an Approved Retirement Fund (ARF) ?
This is a new retirement product that allows you to invest your remaining retirement fund in one or more available
funds. The significant attraction of an ARF is that you retain ownership of your retirement fund no matter what
happens and that you can withdraw your fund, in whole or part, at your discretion.
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What is an Approved Minimum Retirement Fund (AMRF) ?
An AMRF is similar to an ARF but has some compulsory requirments that are intended to safeguard a portion
of your retirement fund. These requirments are removed on your 74th birthday and your AMRF becomes an ARF.
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Can I take a tax-free lump sum ?
Irrespective of whether you are a Personal Pension plan holder or are a Proprietary Director, you can take 25% of
your fund tax-free. You can use this money at your discretion
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Am I affected by tax on retirement ?
Your tax situation depends on the options you choose.
Buy an annunity: your income payments are subject to PAYE
Invest in an AMRF: you can only withdraw growth achieved by your fund(s) and no income tax will apply.
Invest in an ARF (or when your AMRF becomes an ARF): if you withdraw any part of your original investment,
income tax is due. If you withdraw any growth achieved by your fund(s), no income tax will apply.
If you withdraw a combination of original investment and growth, income tax will apply to the part representing your
original investment and not to the growth part of your withdrawal.
Each ARF/AMRF withdrawal you recieve will be gross of tax. The insurance company will notify the revenue
commissioners of any withdrawal from your original investment. We will notify you of the tax payable, which
you should foward on to your tax office as part of your normal tax return.
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What happens on death ?
If you have an annunity, any payments in progress will continue for the rest of your guaranteed period or, if so
arranged, for the life of your spouse or a nominated dependant.
If you have an AMRF, it will become an ARF and will belong to your estate. Through your Will you can direct how your
ARF will be managed. You can pass your ARF to your spouse, children or any other person tax efficiently.
Contact us for additional information
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Life Insurance
