FAQ's
We have taken some time to answer some of our clients most frequently asked questions. If there are any we missed feel free to contact us. We would be happy to answer any queries you may have.
Please choose the relevant section below:
ARF | AMRF
An Approved Retirement Fund or ARF is a post-retirement investment plan, where you can invest all or part of your pension fund after taking your tax-free lump sum on pension plan drawdown, including early retirement. You can withdraw from it regularly to give yourself an income, on which you pay income tax, PRSI, and Universal Social Charge (USC).
An AMRF is similar to an ARF except that the capital invested in the AMRF is not subject to an imputed distribution (please see ‘Imputed Distributions’ below) until the individual is aged 75 years.
The amount which must be invested in the AMRF is €63,500 (as at January 2016) of your remaining fund (or the entire fund if it is less).
You should note that when you reach the age of 75, or upon death, the AMRF automatically converts into an ARF.
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 that is taken from the AMRF can be used to reduce the minimum distribution amount from the ARF assets in that year.
No. An ARF is a post-retirement product that is designed to provide an income for you in retirement. It can only accept transfers from
existing pension arrangements.
Yes, you can have as many ARF’s as you like but only one AMRF
Insurers can pay you every month, every three months, every six months, or every year. Insurers will pay your withdrawal direct into your bank account through Electronic Funds Transfer (EFT).
Yes, you will receive a payslip from your insurer with every withdrawal which will detail the gross amount payable and any deductions.
Any withdrawals from your ARF are treated as income and tax under the PAYE system. This means your payment could be liable to income tax, PRSI, and Universal Social Charge (USC).
The answer should read. All withdrawals will be taxed at the source which basically means that your ARF provider will make the necessary deductions. As part of the process, our advisors will take you through the process of how this all works.
There is always a recurring annual fee levied by the Qualifying Fund Manager (QFM) / ARF provider for the day to day management of the fund(s) chosen. Annual fees typically vary from 0.5% per annum to as high as 2% and are taken directly from the ARF. This charge is often referred to as the Annual Management Charge (AMC).
Trail commission is another charge that may apply. This is a fee that you pay a financial advisor each year and is normally agreed at the outset. It pays the advisor/your agent to continue to deal with you regarding valuations, meetings to discuss investment performance and to assist with taxation and administration queries. It is also expressed as a percentage of fund value each year. Typically this fee ranges anywhere from 0.1% to 1% per annum, depending on what you agree at the inception of the policy.
When setting up an ARF/AMRF you have a range of funds to choose from ranging from low-risk to high-risk funds. The funds you choose must reflect your investment risk profile.
Yes, all providers have a range of funds to choose from and clients can switch their fund choice if they wish.
Yes as part of the process, your advisor will inform the provider of choice to set you up with online access where you can securely log in and review your portfolio .
Annuities
A guaranteed retirement income for life paid at stated intervals until a particular event (usually the death of the person receiving the annuity). Annuities are normally purchased from a life assurance company at retirement in return for a lump sum payment (from your pension fund).
The level of retirement income you receive will depend on annuity rates at the time of your annuity purchase.
If you’re single, a ‘single life’ annuity, which provides a pension income only for you for the rest of your life, may be suitable.
Enhanced annuity An Enhanced Annuity is a way of providing an income in retirement taking into account the individual health and lifestyle of the person retiring.
If you have a Designated Dependant who relies on you financially, you may want to consider a ‘joint life’ annuity, as this will continue to pay them a pension income for the rest of their life if you die before them. You have a choice as to how much your Designated Dependant’s pension income will be from 100% of your pension income down to as low as 20%. If you choose this option your pension income will be lower.
As the level of pension income, you may get depends on your personal circumstances, it can vary from one person to the next
The following items are all taken into account:
The size of your pension fund
• The annuity rates at that time
• Your age
• Your health (if you’re applying for an enhanced annuity)
• Whether you want to add your Designated Dependant
• Your Designated Dependant’s age
• The health of your Designated Dependant (if you’re applying for an enhanced annuity); and
• What product features you choose
Some insurance companies offer annuities that protect, in whole or part, your pension income from future inflation These types of annuities are typically called “escalating annuities” and mean your pension income can rise each year. Typically, you will be offered a fixed rate of increase e.g., 3% per year.
Once the decision to purchase an annuity is made, that’s it, you have your annuity for life. If an ARF is chosen it still allows an investor to convert the ARF to an annuity later.
These are guarantees made by us that if you die within a set period of time, the money you would have received for the rest of that period will be paid as an income to your Designated Dependant or personal legal representative. We offer a minimum one-year guaranteed payment period as standard, but you will always have the option of selecting a different guaranteed payment period when applying for an Aviva Annuity. You can choose a guaranteed payment period of ,2,3,,5 10 year.
Overlap is only relevant to ‘joint life’ annuities with a guaranteed payment period of 5 years. Upon your death, an annuity with overlap will commence paying the second pension income to your Designated Dependant and in addition, will continue to pay the main pension income to your Designated Dependant up to the expiry of the guaranteed payment period.
No. Under current Revenue rules it is not possible to stop an annuity and trade in any balance for cash. Neither is it possible to change any of the features of the annuity (for example the rate of escalation or switching the annuity from a single life to a joint life) once the annuity has been bought. Annuities are designed to provide you with certainty of income during retirement. Once the initial set of options are chosen they cannot be changed. So, it’s important to choose your annuity carefully and get it right the first time.
Any annuity payments are subject to income tax, PRSI, and Universal Social Charge (USC). All deductions are done by the insurer at source. Our advisors will take you through the process.
The main types are as follows:
Single life annuity. A single–life payout is an annuity or pension option that means that payments will stop when the annuitant dies.
Joint Life annuity In a joint-life payout, payments continue after death to the annuitant’s spouse
Enhanced annuity An Enhanced Annuity is a way of providing an income in retirement taking into account the individual health and lifestyle of the person retiring.
Retirement Planning Experts
To enquire how our team can help you, please fill out the form to arrange a call.
7, Abbey House,
Main Street,
Clonee,
Co. Meath
