# Basic Q on AMRF



## probe (19 Jan 2012)

The Pensions board says:
"If you are not entitled to a specified income of​​​​€12,700 a year, which can include your State Pension, then you must set aside an amount of €63,500 to buy an _annuity _(pension) or else invest it in an _AMRF_"

The State pension is 230 per week or 11,960 per year. So if I have TWO pensions, one of which pays at least 740 per annum (before tax?) I can put the other in an AMRF. 
But if I just have one pension from one employer, then there is no way I can meet the 12,700 a year target. Why set a target just above the State level; it looks a rather tantalising "you can't have it" figure.
Unless I split the pension fund: put one amount in an annuity to earn 740/year and the rest in the AMRF?  That sounds rather convoluted.

It's not clear to me:
Is the 63,500 a minimum amount? That is if the second pension fund is less than 63,500 I must buy an annuity. not an AMRF?
If I do buy an AMRF with at least 63,500 then I get say 4% interest (a figure I saw on some other thread) on that and the ability to get at the capital after age 75?
Sure sounds a lot better than an annuity which is dead money.​


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## Baracuda (20 Jan 2012)

Back in 1999 when AMRF/ARF’s were introduced by “champagne Charlie”, you would have needed a minimum guaranteed income of c.12700 to avoid having to purchase a AMRF of 63,500 (which was not linked to CPI over the years) This would need to be invested until you were 75 or else until you satisfied the min income of 12,700 In ’99 the state contributory pension was 5928. Over the years the SCP increased dramatically to its current level of 11975. So as you can see over years the gap between the SCP and the 12,700 min income has gotten smaller.

In the finance act 2011 the min income rule was changed to take account of the fact that the min income of 12,700 was not linked to CPI. The finance act 2011 changed the min income threshold from 12,700 to 1.5 times the SCP (which converts to circa 18,000). Also the AMRF threshold of 63,500 was increased to 119,800. So you now need to have a min guaranteed income of 18,000 to unlock your pension fund and not the 12,700 of yesteryear or else have 119,000 invested in a AMRF

So just to clarify if you cannot meet the income requirement of 18,000 you can purchase an AMRF or an annuity, the choice is yours. As you said you can invest your pension fund in a high rate deposit and get a gross return of 5%p.a. before charges, which is not too far from current annuity rates.


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## probe (20 Jan 2012)

Baracuda said:


> So you now need to have a min guaranteed income of 18,000 to unlock your pension fund and not the 12,700 of yesteryear or else have 119,000 invested in a AMRF
> 
> So just to clarify if you cannot meet the income requirement of 18,000 you can purchase an AMRF or an annuity, the choice is yours. As you said you can invest your pension fund in a high rate deposit and get a gross return of 5%p.a. before charges, which is not too far from current annuity rates.


 
Thanks for the update on the figures, Baracuda. Sorry to ask again but did you really mean "if you CANNOT meet the income requirement of 18,000 you can purchase an AMRF"? I thought the 18,000 guaranteed income for life from other sources (which is what else but another pension, surely?) was a MINIMUM requirement to be able to purchase an AMRF.

And when you say "you can invest your pension fund in a high rate deposit " is that conditional on having at least 119,000 to invest? Below that, it must go into an annuity, above that I could buy either an annuity or invest in an AMRF?

Does a high-rate deposit qualify as an acceptable place for an AMRF of 119K or more? And for a pension, is a high-rate deposit safe enough? If this is going too much into personal advice, sorry, feel free to reply with what can be safely said to anyone. If these questions are already answered exhaustively in some document, please point me to it, I found the insurance companies' FAQs very light and the Pensions Board too much of "you need to ask your advisor"; I'm trying to understand the T&Cs for myself.


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## Baracuda (20 Jan 2012)

I think you are getting a little confused between an AMRF and a ARF. Give you an example, lets say you only have the SCP of c.12,000 and you have 50K in your pension fund, you can go ahead and purchase an AMRF for 50K you do not have to buy an annuity at all.


Now lets say that you have 200,000 in the fund and you did not want to purchase an annuity. You would have to purchase an AMRF for c.119,000 which would have to be left there until your 75th birthday and with the remainder you could take as taxable cash or invest in a ARF which you could cash in part of over a number of years in a tax efficent way.


Some companies have what is called _Self invested Funds_ as part of their AMRF fund choice. This allows you to put your money on deposit with a bank of your choice and get the highest interest rate in the market. EBS (as an example) have a rate of 25% over 5 years which is paid annually. Once you maintain the original investment as in the example of 50K you can withdraw the surplus every year.


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## VOR (24 Jan 2012)

I had a discussion with a broker recently who said that you really only need a pension of €6,000 p.a. to meet the ARF rule. Her point was that the revenue would allow for the future state pension when assessing the entitlement to an AVC. So if you retire at 60 with a pension of €6K, revenue will allow you to have an ARF as you will be entitled to a guaranteed SW pension of €12K at 66-68 years of age. This seems highly unlikely to me. I thought the retiree had to be in receipt of a guaranteed income of €18K when retiring. Can anyone clarify?


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## probe (24 Jan 2012)

As far as I understand, the income of 18K includes the State Pension. With that, any excess of fund over 119K can be invested in an AMRF. If I understand Baracuda's previous response right.


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## probe (24 Jan 2012)

Baracuda: Yes, I had not been distinguishing them clearly, thanks for the explanation. My broker tells me I can get 3/4 of final year salary as a tax free sum (which surprised me I thought the limit was 25% of fund value - may be there is a "whichever is lower" rule?)
He also says all Irish Life are offering is an annuity, not an AMRF. I've asked him to check EBS and Zurich as well.


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## Baracuda (24 Jan 2012)

Right Ok you seem to be in a occ pension which means that you can get a TFLS of 3/80 of your salary * each year service you have with your employer i.e. if you have 20 years service you can get 60/80 of your salary as a TFLS. If you choose this option you will be compelled to buy an annuity with the remainder. 

If you were in a private pension you would get a max of 25% TFLS and you could then either buy an annuity or invest in a AMRF/ARF

The Finance Act 2011 leveled the playing pitch for people who had a occ pension and gave them a choice of either of the above but not a combination of both.

Irish life would usually provide a standardized qoute for the 1st option and then it is up to your broker to advise you which of the two options is best for you after he/she would do a post retirement review with you! 

Go back to your broker and ask him/her to get the full options from Irish Life not just the standardized option. If you are having trouble with this you can PM me.

Declaring an interest as an employee of said company! 

P.S. EBS is an agent of Irish Life and provides deposits to Irish Life's Self Invested Fund. They are not the product provider


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## Baracuda (24 Jan 2012)

VOR said:


> I had a discussion with a broker recently who said that you really only need a pension of €6,000 p.a. to meet the ARF rule. Her point was that the revenue would allow for the future state pension when assessing the entitlement to an AVC. So if you retire at 60 with a pension of €6K, revenue will allow you to have an ARF as you will be entitled to a guaranteed SW pension of €12K at 66-68 years of age. This seems highly unlikely to me. I thought the retiree had to be in receipt of a guaranteed income of €18K when retiring. Can anyone clarify?


Your correct! Your a wasted talent, perhaps you should be doing her job


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## VOR (25 Jan 2012)

Baracuda said:


> Your correct! Your a wasted talent, perhaps you should be doing her job




No thanks!!! But she should not be doing her job either. This particular broker was invited in to talk to a group of us.  I find her advice both dangerous and negligent.


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