ARF & AMRF
Your retirement could last for many years, so you may want to keep your options open. One way to do this is to keep your pension invested and take income as and when you need it. This is called pension drawdown and the primary vehicle of this in Ireland is an ARF or Approved Retirement Fund. Although there are other drawdown options, this is most likely the best option to preserve and pass on wealth.
Note – Before taking your ARF you must first satisfy revenue rules by placing €63,500 into an Approved Minimum Retirement Fund (AMRF) until you reach 75 years of age or by proving to revenue that you have €12,700 in guaranteed income per year.
Example of how an ARF and an AMRF work together
You have a retirement fund €500,000
You take a Retirement lump sum (for example, 25%) €125,000
Invest in an AMRF €63,500
(if you do not have a guaranteed pension income for life of €12,700 a year)
Invest the rest in an ARF €311,500
You can buy a pension for life (annuity) with the fund at any stage during the term of your ARF or AMRF plan.
There are benefits and drawbacks to ARF’s as investment performance and ongoing monitoring are very important to the success of your ARF.