An ARF is a personal tax-efficient investment fund into which you can transfer all or part of the balance of your pension fund after you receive your retirement lump sum.
If you would like to have control over how your retirement fund is managed, an ARF might be the best option for you. An ARF allows you to remain invested in the market with the ability to control your investment and take a flexible income in retirement.
An ARF allows you to invest all or part of your pension fund after you retire. You can decide on the type of fund you would like to invest in, and the amount of risk you’re comfortable with. With an ARF you can still withdraw from your fund on a regular or ad hoc basis (subject to income tax and USC. PRSI may also apply). But it’s worth remembering that since your pension fund is still invested, its value may go down as well as up.
An ARF is available to members of an Occupational Scheme (assuming scheme rules allow) and individuals that hold a Personal Pension, Personal Retirement Savings Account (PRSA) or Personal Retirement Bond and have reached Normal Retirement Age or have taken Early Retirement.
To set up an ARF you must have a guaranteed pension income of at least €12,700 per annum. This includes a pension or annuity that is guaranteed to be payable for the rest of your life, including any State guaranteed pension. If you do not have this level of guaranteed pension income you must invest €63,500 in an Approved Minimum Retirement Fund (AMRF).
The test does not apply to individuals aged 75 or over, who may invest in an ARF without satisfying the guaranteed income or AMRF requirements. When you reach the age of 75, or upon death, the AMRF automatically converts into an ARF.
An AMRF is similar to an ARF except that the capital invested in the AMRF is not subject to an imputed distribution until the individual is aged 75 years.
The AMRF holder can access up to 4% of the value of the assets each year, irrespective of age as a once-off withdrawal, subject to PAYE. Any distribution taken form the AMRF can be used to reduce the minimum distribution amount from the ARF assets in that year.