# ARF Advice please



## logonmar (28 Apr 2010)

I am aged 61 and retired last year on a defined benefits pension.
Having taken a cash lump sum on retirement this is currently sitting in a deposit account earning roughly 3%

I confess to absolute ignorance of ARF's other than the fact that by investing in one I will lessen my tax liability for 2009 - which is currently being prepared.

I'm told that I have scope to invest 25k into an ARF if I so choose in respect of 2009.
Questions:
a) Based on the simple fact that the alternative option for me is to leave it on deposit,  is it sensible/wise to put it into an ARF?
b) Here I display my total ignorance! If I was to put the money into an ARF how long must I leave it there AND can I withdraw it as a lump sum at a particular point or only use it to generate an annuity? 
I don't want to lock cash away long term but would be happy to go for 3 - 5 years if I knew I could take value in full at that point
c) Who should I approach if advice is to opt for an ARF/

Bottom line is that my pension is more or less OK, for the moment, so not really aiming at changing my monthly pension amount at a future date so therefore I'm really just trying to ascertain whether an ARF is a good alternative for me compared to a deposit account bearing in mind that I'm aged 61 and that I would like to be able to cash in full value when aged 65 or 66.
Hope


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## LDFerguson (28 Apr 2010)

Hi logonmar, 

Welcome to the Askaboutmoney.com community.  

If I'm reading your query correctly, the money you're enquiring about is the lump sum you got tax-free when you retired?  If that's correct, then you cannot put it into an Approved Retirement Fund.  Assuming you weren't a shareholding director of your former employer, the only access you would have had to an ARF was in respect of Additional Voluntary Contributions (AVCs) when you retired.

Do you have any income other than your pension?


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## Conan (28 Apr 2010)

logonmar,
If you retied from a DB scheme then presumably you got :


A tax free lump sum, and
An annual pension
You cannot invest the lump sum into an ARF and it would not make sense in any event, as any income you draw out of an ARF is taxable as income (whereas the lump sum is tax-free).

ARFs are mainly used by Self Employed or Company Directors retiring out of Defined Contribution schemes, instead of buying an annuity with thr residual fund (after taking the tax-free lump sum). 

As Liam said, if you had an AVC fund you could ARF that (instead of buying an additional annuity).

If you have a lump sum, there are lots of investment options (depending on your investment term, your attitude to risk and your return requirements) out there. In such arrangements only the growth would be taxed (varies depending on the structure). The capital is not taxed.


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## Shirazman (4 Jun 2010)

My situation is as follows:-

Male public servant aged 56. Have just retired under the ISER. Have a PS pension of some €25K p/a (so I won't need a AMRF).

Also have an AVC (Union Group Scheme through Cornmarket) with Irish Life, current value €70,000.

Will be able to draw down €20K lump sum tax-free from AVC, leaving me with a balance of €50K to invest in an ARF.

Don't want to pay Cornmarket any more commission as they've already bled me through the AVC.

My questions:

Can I: 1. encash the AVC myself and 
2. purchase an ARF through a discount broker.

or am I tied to Cornmarket for these transactions.

(Because it's clear to me from this link, that Cornmarket will only bleed me again when it comes to the ARF.)

Thanks for any help/advice.


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## Protocol (4 Jun 2010)

I was involved with a Cornmarket / IL AVC fund that matured.

From my limited knowledge, you don't have to stay with Cornamrket / IL.

You can use the AVC fund to buy an ARF through any broker.


We stuck with Cornmarket.  We got 101% alloctaion on the ARF.

Your attached doc is helpful and leaves me doubting that we did the right thing.

Why oh why are commission rates so high!!!!


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## boaber (4 Jun 2010)

you can take the balance of your funds as a taxable lump sum (if you really need the cash now) OR you can invest in an ARF

You don't have to use Cornmarket.

If you invest in an ARF, you will have a suite of funds available to you, ranging from low to high risk - depending on your attitude towards risk.


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