Pensions & Retirement Planning

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Post Retirement Pensions

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A ​Retirement Lump Sum​ is an amount you are allowed, only once per pension, to withdraw at the time of exercising your retirement options. This does not mean you must wait until normal retirement age.


The maximum lifetime tax-free limit on retirement lump sums is €200,000.


Where a lump sum (or lump sums) exceeds this tax-free limit the portion between €200,000 and €500,000 is subject to tax at the standard rate (currently 20%). The excess over €500,000 is subject to Income Tax, Pay Related Social Insurance (PRSI) (if applicable) and Universal Social Charge (USC).

With the remaining balance of your pension fund, you have two options: Annuity or Approved (Minimum) Retirement Fund. Here is some information about these options.

An Annuity is a contract with a life insurance company that will pay you a guaranteed, regular pension income for life in return for you paying a fixed sum of money to an insurance company from your retirement fund. The income that you receive will be subject to income tax and Universal Social Charge (USC). At the moment, Annuity rates are very low making it unattractive to purchase. You can include a % spouse’s pension in an Annuity, but this will reduce the annuity rate further. 

An Approved (Minimum) Retirement Fund is a personal retirement fund where you can keep your money invested after retirement. You have more flexibility to decide your level of income that is suitable for you.

You can withdraw money from the ARF regularly to give yourself an income (subject to minimum requirements below) and, unlike an Annuity, any money remaining in the fund after death can be left to your estate or spouse.

Without appropriate planning and management, the fund in your ARF may run out depending on how much you withdraw each year and how your investment funds perform.

There are certain restrictions to investing in an ARF; these should be considered before any decision is taken. To invest in an ARF, you must:

  • have invested €63,500 in an Approved Minimum Retirement Fund (AMRF) or Annuity or in a combination thereof,
  • or have a guaranteed lifetime income of €12,700 p.a., (keep in mind that the current maximum rate of Contributory State Pension is €12,911)
  • or have reached 75 years of age.

The minimum amount you are required to withdraw from an ARF is:
4% from the year you turn 61;
5% from the year you turn 71;
or 6% if your combined ARF & Vested PRSAs are valued at more than €2,000,000.

The main difference between an ARF and an AMRF is that with an AMRF you have the right
– but not the obligation – to take an income of a maximum of 4% from your AMRF, each year.
An AMRF automatically becomes an ARF when you:
I. reach age 75;
II. or meet the minimum income requirement of €12,700

    • The value of your investment may go down as well as up.
    • If you invest in these funds you may lose some or all of the money you invest.
    • Past performance is not a reliable guide to future performance.
    • These funds may be affected by changes in currency exchange rates.
    • Withdrawals and switches from funds investing directly or indirectly in property may be deferred for up to 6 months.
    • Withdrawals and switches from all other funds may be deferred for up to 3 months.