Approved Minimum Retirement Fund
After taking your tax-free lump sum, under current legislation, you must invest the first €63,500* of your pension pot in an Approved Minimum Retirement Fund (AMRF) unless you have a guaranteed pension income for life of at least €12,700* p.a. or you are aged 75.
*figures as at May 2016
Approved Minimum Retirement Fund (AMRF)
An AMRF is a retirement bond, which invests your retirement money in funds that you choose. The funds available range from deposit type funds to specialist equity and alternative asset funds. The AMRF acts as a safety net by not allowing you to withdraw any of the original capital invested before age 75. Any investment growth can be withdrawn from the fund.
At age 75 an AMRF converts to an Approved Retirement Fund which allows you to make withdrawals at any time.
Approved Retirement Fund (ARF)
An ARFis a retirement bond, which invests your retirement money in funds that you choose. The funds available range from deposit type funds to specialist equity and alternative asset funds. An ARF allows you to withdraw lump sums from the fund whenever you want. On your death the remaining value of the fund can be left in your Will as part of your estate. The proceeds can also be transferred into an ARF in your spouse’s/civil partner’s name.
You are required to withdraw a minimum of 5% from your ARF each year or pay tax on it as if you have.
While AMRFs and ARFs allow you to retain control of your retirement funds, your income is not guaranteed. There is a risk that if you are taking regular withdrawals from the fund, it may diminish. The value of your AMRF/ARF may also fall as well as rise.
Withdrawals from your AMRF and ARF are subject to Income Tax at your marginal rate and USC deductions under the PAYE systems.