Accessing your Private Pension can be a daunting experience. You will have the option of taking at least 25% of the value of your Pension fund as a tax-free cash lump sum. However, there are important decisions to make when it comes to deciding on how best to use the remaining 75% of the pension fund. It’s crucial you understand what these options are and the long-term implications of your decision.

You will have the option of

✅ Purchasing an Annuity or

Investing in an Approved Retirement Fund (ARF)

What is an Annuity?
An Annuity is a financial product whereby after taking your tax-free lump sum from your pension fund you allow the pension provider to retain ownership of your residual pension fund, and in return they will give you a guaranteed income for the rest of your life.

What is an Approved Retirement Fund? (ARF)
The ARF option allows you to retain ownership of your funds. An ARF is established with your pension provider, or another provider on the market if you so wish. These funds are then invested in much the same way as your original pension. You have the option of taking income from the ARF fund as you need it (within certain Revenue limits). You own the ARF fund. The ability of the ARF to generate income for you depends on the investment performance of the fund and your need for income each year.

How do I decide what is right for me?

There are many important differences between Annuities & Approved Retirement Funds. Your decision can be considered under a few headings:

1) Certainty of Income
2) Flexibility
3) Investment Risk
4) Inheritance
5) Value for Money

1) Certainty of Income– an Annuity provides for the greatest certainty of income as the insurance company commits to providing you with a fixed level of income for life. An ARF is different, it allows you to drawdown anywhere from 4% to 100% of the fund value each year. If it is spent too quickly then you could have a situation whereby the ARF has ‘run out’ before you pass away, leaving you without income in later years. The ARF requires an understanding and detailed planning of what level of drawdown it can sustain in order to provide income for life. This can be planned with your Financial Advisor.

2)  Flexibility– once the decision to purchase an Annuity is made, that’s it, you have your Annuity for life. However, if an ARF is chosen it still allows an investor to convert the ARF to an Annuity at a later date.

3)  Investment Risk- there is no investment risk with an Annuity. There is investment risk with an ARF. Provided the ARF is reviewed regularly with your Financial Advisor then investment risk can be minimized and over the long-term need not be a major concern.

4)  Inheritance– inheritance opportunities for Annuities are very limited. Most Annuities allow for a continuation of income, perhaps 50%, to a spouse in the event of the Annuity holder passing away. However, in the event of death of an ARF holder, the full value of the ARF passes to his / her spouse. In the event of subsequent death of a spouse the full value of the ARF passes to his / her estate/ children etc.

5)  Value for Money– If you purchase an Annuity you would have to live to at least 90 years of age in order to get back in Annuity payments what you purchased in the beginning. Annuities are less attractive than they have been for many decades due to poor Annuity rates offered by many of the Annuity providers in the market, and this situation is not expected to improve for many years. An ARF investment may be a prudent step as it offers flexibility of income, attractive inheritance options, and also the ability to convert the ARF to an Annuity at some point in the future.

I hope you can see that deciding on how best to access your Pension Fund requires some careful planning and thought. We have been advising clients all over Ireland for many years, showing them how to make smart decisions when it comes to accessing their pension.

You can also visit the dedicated Pension Access page on our website for more information by clicking

Call or email us today and we would be delighted to guide you through your options


Michael Coburn BBS, QFA, FLIA, LCOI, RPA, SIA

Dublin: 01 5267770
Wexford: 053 9110380