# ARF rule changes 2011



## ignorant1 (6 Mar 2011)

Four years ago I left the company I worked with for 30 years and transferred my accumulated pension pot (defined contribution) into a Personal Retirement Bond (Irish Life - Consensus Fund) and went back to college to retrain in a completely different area in which I was interested.
Bad timing - have been unable to get a job in this area and the This post will be deleted if not edited to remove bad language fell out of the value of the Retirement Bond (at one stage, it was down to 57% of what I put in, has picked up since but is still only at 87%). My 65th birthday was on 20 Jan 2011. I had intended to take the tax-free lump sum and move the rest into an ARF - I would have qualified under the old rules as I have a guaranteed income of about €15000 (€11752 state pension + €3536 from a public service pension). My question is: can I still use the ARF or do I have to take an annuity, as the minimum requirement now seems to be about €18000? From what date exactly did the new rules apply, bearing in mind that my "normal retirement date" was 20 Jan.?


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## North Star (7 Mar 2011)

Hi ignorant1; you can still use the ARF however there are 3 things you need to consider 1) the new rule is that you need to have guaranteed income of €18k p.a to avoid investing €119,800 into an AMRF first. You cant draw down the AMRF capital till you have reached 75. There are also 5% minimum imputed distributions from your ARF each year. Therefore you need to be careful with your investment strategy to be as certain as you possibly can be that you are earning a reasonable return within your loss tolerances. If you had a similar experience as you had with the Irish Life Consensus fund ( loss of 43% at worst point) then there would be a risk that your ARF would bomb out ( no funds to provide income) perhaps before the AMRF were available; leaving you with much lower income than you expected. You should consider getting advice on the investment options open to you.
 This is especialy true if you are relying on your ARF to supplement your retirement income
2) Have you checked out which option will provide you with the highest amount of tax free cash? it is worth quantifying what you will get under both options

3) As with any product like this please make sure you are getting good value in terms of allocation rate, annual management charges and other costs.

as I said earler re your investment options; retirement planning is a very important issue, you should consider the pros and cons of getting fee based independent advice. Whatever you decide, do as much research as you can to make sure you make the correct informed decision.

Regards
[broken link removed]


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## boaber (7 Mar 2011)

The Finance Act 2011, and therefore the new ARF rules, was signed by the President on 6th February 2011.

The 'ARF Option' would not have been available to you as a former DC member, now in a PRB, until the signing of the Act (unless you had some AVCs?)

You now have 2 options available:

1) Lump Sum based on salary & service with the balance to be used to purchase an annuity

2) Lump Sum up to 25% of the value of the fund, and the balance of the fund to an ARF/AMRF


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## oysterman (8 Mar 2011)

boaber said:


> You now have 2 options available:
> 
> 1) Lump Sum based on salary & service with the balance to be used to purchase an annuity
> 
> 2) Lump Sum up to 25% of the value of the fund, and the balance of the fund to an ARF/AMRF


Don't quite understand this choice....why can't one take a lump sum based on salary and service with the balance to an ARF/AMRF (presuming retirement income sufficient)?


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## Conan (8 Mar 2011)

Under Revenue rules you cannot mix'n'match. It's either :
1.  25% lump sum and ARF/AMRF, or
2.  Lump sum based on salary and service (can be 150% of Salary if you have minimum of 20 years service) and annuity.


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## oysterman (8 Mar 2011)

Conan said:


> Under Revenue rules you cannot mix'n'match. It's either :
> 1.  25% lump sum and ARF/AMRF, or
> 2.  Lump sum based on salary and service (can be 150% of Salary if you have minimum of 20 years service) and annuity.


Revenue website doesn't seem to make this distinction too clearly:

[broken link removed]

The implication is that as long as you ensure that the lump sum taken aggregated with the lump sum amount taken from a pension scheme of which the taxpayer is a member (in the OP's case it's a public service scheme) does not exceed Revenue limits, then you can use the balance for ARF/AMRF or annuity.


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## Conan (8 Mar 2011)

This Revenue document is written in the context of those who can avail of the ARF option (Who can avail of the options?), before the recent changes in the FA 2011 which extended the ARF option to all DC schemes.  It is not written to cater for members of Occupational Pension schemes -other than for AVC funds.
The options for members of Occupational Pension schemes are as detailed earlier (though if one went for the 25% and the ARF, it is possible for the ARF to subsequently buy an annuity (just to complicate things further!)


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## Jester (13 Mar 2011)

Just one point to make on the AMRF - my understanding is that the minimum income requirment is now €18K, but a change to the rules for AMRF is that if you meet this income requirement before age 75, you can convert the AMRF to an ARF. In the past the AMRF was not available until 75.


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## Baracuda (15 Mar 2011)

When the finance minister bought in the new minimum requirements for AMRF/ARF he also put in a caveat, that once you could satisfy the old requirement of a guaranteed income of 12700 before the finance act was passed you could convert an AMRF or future (within 3 years) unclaimed pension benefits to a ARF rather than having to purchase an AMRF for c.120000. If you applied for you transition pension and your PS pension before the 6th February, you could apply to the Revenue commissioners for an exemption to the new minimum AMRF rule due to the fact that you had satisfied the old rules as you had applied for the transition and PS pension’s and therefore you should not need to buy an AMRF. 

If you did not apply for your pension benefits before the 6th February you could use part of your BOB to purchase a level single life annuity for the difference between your current benefits and the min guaranteed income requirement of 18000 = c.2700 This would cost you approx 45000 as annuity rates are quite good at the moment (about 6.5% for male about 5.8% for female)


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