Revenue Change Specified Income Rules.
As it is known, any individual who wishes to exercise an “ARF option” on retirement and who does not have “specified income” of €12,700 p.a. must place €63,500 in an vehicle called Approved Minimum Retirement Fund.
Recent increases in the State
pension rate mean that anyone qualifying for a full pension will satisfy the
specified income requirement at age 66, however, this remains an issue
for individuals with modest levels of retirement savings who retire prior to
age 66.
This is due to the level of state
pension being based on the yearly average of PRSI contributions from the time
one first enters the PRSI system until the point of retirement.
Recently, Revenue advised that
the pension “Christmas bonus” may be
taken into account for the purposes of the specified income test.
Further communication from Revenue on their eBrief No. 112/19 has amended 23.5 Revenue Pensions Manual to
allow certain additional payments made by DEASP (current name for Department of
Social Welfare) to be included for the specified income test. The payments are:
Fuel Allowance: This is a means tested benefit worth €22.50 per week,
or €585 p.a., payable for 6 months from October to March.
Household Benefits Package: This is a monthly allowance of €35, or
€420 p.a., towards electricity/gas costs. A free TV licence, worth €160, is
also payable.
Telephone Support Allowance: This is €2.50 per week or €130 p.a.
An individual who is in receipt
of all of the above payments can increase the level of specified income by
€1,295 p.a. The rule change has limited impact but will assist those who do not
qualify for the full rate of State pension due to insufficient PRSI
contributions.
Source – ©Clive Slattery. 22 June 2019
What is an ARF Pension?
