# Transfer DB Pension to ARF



## cronley (13 Mar 2011)

I have preserved pension benefits in a Defined Benefit scheme with a private company which i left a few years ago - scheme member for 30 years. I have not yet started to draw pension from the scheme. I have no fears for the solvency of the fund or the long term survival of the company. I am now not working & would like to start drawing a pension.
I know the general view is that it is best to stay with the DB scheme and draw the pension. But i have circumstances that it would suit me to transfer out of the scheme. I would like to transfer to an arrangement that gave me the option of an ARF. Following recent changes that allowed Defined Contribution schemes to avail of ARF - is it possible for my DB scheme to get the ARF option. I am told by my scheme that I can only transfer to a Buy out Bond, which restricts me to buying an annuity, which I dont want to do. Why is a Buy out Bond not considered the same as a Defined Contribution scheme, and allowed access to ARF in the same way as DC scheme.
I also had small AVC element linked to my DB scheme during my time with the private company. Can all my DB preserved benefits be transferred to this AVC, and then get access to ARF.
Any help appreciated.


----------



## Baracuda (14 Mar 2011)

Hi

The F. Act 2011 only provides ARF options for DC members and not for DB members. When you transfer out of a scheme to a BOB it is considered as a DB BOB and is treated as such so ARF options are not available to you. The AVC elment would qualify for an ARF but as you said that this is only a small element you will probably use a propotion of this for TFLS. Just that you are aware of how ARF option works, you would need to have a guaranteed income of 18000 pa, 12000 of this can be made up of Contributary Pension but the remainder has to be pension benefits so divident income, rental income etc can not be used, otherwise you would need to invest 120000 into a AMRF which cannot be accessed till age 75


----------



## LDFerguson (15 Mar 2011)

There is some uncertainty over whether or not a Buy Out Bond is considered DC or DB for the purposes of the new ARF availability, even if the purchasing scheme was DB.  I know that one of the major Irish life assurance companies has sought clarification on this point from Revenue and is awaiting a response.


----------



## Baracuda (15 Mar 2011)

Yes your right Liam and I asked Revenue this myself and they confirmed by email that they will give DC BOB ARF rights as the BOB has not been crystalized so it is treated in the same way as if the fund remained in the original scheme


----------



## LDFerguson (15 Mar 2011)

Hi Baracuda, 

Thanks for this.  Did you leave out a NOT in the last post?  I think you meant to say "...that they will NOT give DC BOB ARF rights..." seeing as the original scheme doesn't have ARF rights.  

Any chance you could e-mail me the Revenue clarification on this to liam@ferga.com?  

Cheers, Liam


----------



## Baracuda (15 Mar 2011)

FYI as per my previous post Revenue have confirmed that they will give DC BOB ARF rights but if a person takes this option they will have to take 25% TFLS rather than 3/80*years service TFLS, however on foot of Liams post I will go back to Revenue and seek clarification again and I hope to post their response subject to their approval. This may take a few days so please be patient...


----------



## cronley (28 Mar 2011)

Baracuda
Any progress finding out from Revenue if they will give ARF rights to a Buy out Bond bought with a transfer from a Defined Benefit pension scheme. Can you post the phone number of the Revenue section dealing with this.


----------



## Baracuda (28 Mar 2011)

cronley said:


> Baracuda
> Any progress finding out from Revenue if they will give ARF rights to a Buy out Bond bought with a transfer from a Defined Benefit pension scheme. Can you post the phone number of the Revenue section dealing with this.


 Hi Cronley

Just after checking there with the person that had the query in with revenue and this was their responce;

With regard to the position for buy-out bonds, my understanding is that the new ARF/AMRF option applies to all buy-out bonds including those from DB schemes.  This is assuming that the buy-out bond itself is set up on a DC basis, for example some older buy-out bonds would have been set up for a specified pension benefit on retirement. 

So before you go ahead and persue this course of action you should check with the proposed company that you intend to use for the BOB that they will let you do this as all the Life companies may not have seeked revenue clarification on this and it could hold up your claim. 

I am sure that you are also aware that you will have to satisfy the new requirements of guaranteed income of 18000 yearly income or else purchace an AMRF for 120000 which must be left invested until the age of 75!


----------



## cronley (31 Mar 2011)

Baracuda
Thank you for that info. The reply from your contact, who I presume is not a Revenue official, is only his "understanding". This is not strong enough basis to go ahead with a transfer. Is there any link to a Revenue source that legally confirms for certain that a Buy out Bond bought with a transfer from a Defined Benefit pension scheme, would have the ARF option.


----------



## boaber (1 Apr 2011)

I've received the following confirmation from a Revenue Official



> The treatment of Buy out Bonds follows on from the treatment of the originating Pension Scheme which means that the retirement benefits payable are the same as provided for in the scheme. If an individual were entitled to the ARF option under the original scheme they would be entitled to this option under the BOB.
> 
> It follows that the ARF option is not available where the defined benefit scheme entitlement is transferred to a Buy out Bond in the case of an individual who is not a proprietary director.


----------



## Baracuda (1 Apr 2011)

"It follows that the ARF option is not available where the defined benefit scheme entitlement is transferred to a Buy out Bond in the case of an individual who is not a proprietary director."

Hi boaber

So would it be fair to say in your opnion, based on the above line; that a DB BOB which has a defined annuity rate would not qualify for ARF rights as this is a fully transferred entitlement where as a DB BOB which only transfers the TFLS entitlement and not the annuity rate would qualify ARF rights i.e. defined benefit's has not been transferred to the BOB?


----------



## Baracuda (1 Apr 2011)

cronley said:


> Baracuda
> Thank you for that info. The reply from your contact, who I presume is not a Revenue official, is only his "understanding". This is not strong enough basis to go ahead with a transfer. Is there any link to a Revenue source that legally confirms for certain that a Buy out Bond bought with a transfer from a Defined Benefit pension scheme, would have the ARF option.


 Hi Cronley
I am restricted in what I can post with regards to Revenue phone numbers as they are internal phone numbers and contacts. I would suggest that you write to Revenue outlining your plans and seek confirmation from them directly for absolute and legal confirmation. However if I were you and were looking for quick confirmation I would contact the 2 main pension companies (Irish life and New Ireland) and they will confirm the information that you are seeking.


----------

