Pension Access - Approved Retirement Fund (ARF)

About to access your pension? If you are considering accessing your pension, then you may need some guidance along the way. You will need to:

1) Make sure you get the highest possible tax-free lump sum.

2) Decide between an Annuity or an Approved Retirement Fund (ARF).

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Understanding Your Options

Before you make the final decision on what options to choose when accessing your pension, you will need to understand the following:

How do you maximise your Tax Free Lump Sum entitlement?
How much income will you get from your pension each week/month when you retire?
How long will this pension income last?
What happens to your pension if you die?
What income tax will you pay on your pension income?

At this point, you may even have received a letter from your current pension company requesting you to complete a form which asks you how much ‘Tax Free Cash’ you wish to receive and also asking you to choose between an’ Annuity’ or Approved Retirement Fund (ARF). It is very important that you select the right options.
Terms such as ‘Tax Free Cash’, ‘Annuity’, ‘Approved Retirement Funds (ARF) are issues we deal with every day, and we understand what these options really mean for you and your family. The options above have long-term implications and it is important you “ Get This Right”

What Happens When I Access My Pension?

You will have either a personal pension/company or occupational pension or PRSA pension or maybe accessing an old employer pension? This pension will have a transfer value or amount your fund is worth. Example €250,000.
You will be able to receive a Tax Free Cash Lump Sum.
The balance of the pension is taken in the form of Annuity (regular income amount) or an Approved Retirement Fund also known as an ARF.

When accessing your pension, you are entitled to a lump sum, and with the remainder, you have to choose between an Annuity or an Approved Retirement Fund (ARF).

The tax-free lump sum entitlement can be calculated in one of 2 ways (depending on the type of pension you have). These are:

In both cases, the tax-free lump sum is capped at €200,000.

After getting your Tax Free Lump Sum, you will then have to choose what to do with the remainder of your pension. Your Options are:

An Approved Retirement Fund (ARF) - An Approved Retirement Fund (ARF) is a personal retirement fund where you can keep your money invested after retirement, as a lump sum. You can withdraw from it regularly to give yourself an income, on which you pay income tax, PRSI and Universal Social Charge (USC). You retain ownership of the ARF Fund.
An Annuity - An annuity is a financial product whereby after taking your tax-free lump sum from your pension fund you elect to allow the insurance 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.

Advantages of an ARF

Flexibility

Tailor your income withdrawals to suit your lifestyle.

Control

Decide how your funds are invested.

Growth Potential

Benefit from continued investment returns.

Inheritance Planning

Pass remaining funds to your estate in a tax-efficient manner.

Minimal Withdrawal

From age 61 years you are required to withdraw a minimum of 4% per annum of the funds value.

Important Considerations

An Approved Retirement Fund (ARF) is a flexible way to provide yourself with a retirement income. You can withdraw money as needed, leaving the rest invested.
Your withdrawals are subject to income tax, PRSI and USC.
Like a regular pension, returns are not guaranteed; market fluctuations can affect your funds value.
It is crucial to have a good ARF/financial advisor that will have regular reviews with you to ensure your retirement plan is on track.
In the event of death, your ARF funds can be passed on to your spouse/estate. There may be tax implications depending on your relationship to the deceased.

Consulting with a Financial Advisor can help mitigate these risks and ensure your ARF remains on track.

Real-Life Example: Maximising Retirement Funds

Meet Jack, a 60-year-old business owner with a €1 million pension fund. He opted for an ARF strategy:

Jack was entitled to a lump sum of €250,000, of which €200,000 was tax-free and the other €50,000 was taxed at 20%.
He placed €750,000 into an ARF.
Annual Income: Draws €30,000 annually (4% of the ARF), subject to taxes.
Inheritance: Upon his passing, the remaining ARF funds will transfer to his spouse, and subsequently to his children.

Jack’s approach provides him with flexibility, control, and a legacy for his family.

Real-Life Example: Maximizing Retirement Funds

Feature	ARF	Annuity
Ownership of Pension Fund	Retained by retiree	The insurance company takes ownership in return for a fixed annual income
Income Flexibility	Adjustable withdrawals	Fixed income
Investment Risk	Yes	No
Potential for Growth	Yes	No
Inheritance	Remaining funds pass to your estate	Limited or none

Important To Know

Testimonials

Peace of Mind for Families Across Ireland

I have been receiving advice from Jim Doyle in Guardian Wealth for 3 years. I was advised by a friend to use Guardian Wealth and so I contacted them when the time came to access my pension. Jim has been very good to me and has given me great advice over the years. He keeps in touch to give me updates on my pension and he is always available by phone if I have any questions. I am delighted that I am dealing with Guardian Wealth. They are a professional outfit and very straightforward to deal with.

Mr Ian Dornan

Meath

Many thanks for all your help in making the transfer so seamless. I have to say I thought you did an excellent job and I am lucky to have landed on your website when I first started looking for someone to help me on this.

Mr. Patrick McAllister

Dublin

Drawing down my Pension was a big financial decision and I was very happy I chose Guardian Wealth. Michael clearly explained my options to me and dealt with my insurance company to make sure it went smoothly. I now meet with Michael every year to make sure my retirement plans are on track. I have no hesitation in recommending Guardian Wealth’

Dr Declan Woods

Carlow