Non residents - risk of no ARF option

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BingCrosby

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I've an Irish DC pension, but no longer live in Ireland (USA). I believe the below may apply to anyone non-resident when it comes time to purchase ARF.

I've recently learned from a PWC article (cannot link it here - search "PWC ARF non resident") that the revenue has suggested onerous ARF reporting requirements for non-residents.

The net might be that non residents may have no ARF option at retirement. I'm not certain and I'm not a tax expert.

Has anyone else looked into this? I can see so many problems with this scenario that it seems untenable in the long term (friction for international mobile employees, problems for retirees who move abroad after getting their ARF etc.).

Thoughts or insights very welcome.

It looks like this is the situation for some time (since 2020) so if there is a link to a previous thread, apologies, please share.

B
 
BingCrosby said:
Yes - thanks (wouldn't let me add the link to my original post for some reason).
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@Gordon Gekko - Yes that seems the most likely situation - non-Irish resident folks stuck with non-existent or very expensive ARF's. Has anyone found themselves in this situation ? Its quite possible people are using an Irish address to purchase ARF's while living in the US and taking their chances - I am not recommending that so I'm trying to see if there is any wisdom/experience on this already.
 
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BingCrosby said:
@Gordon Gekko - Yes that seems the most likely situation - non-Irish resident folks stuck with non-existent or very expensive ARF's. Has anyone found themselves in this situation ? Its quite possible people are using an Irish address to purchase ARF's while living in the US and taking their chances - I am not recommending that so I'm trying to see if there is any wisdom/experience on this already.
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That is the case. You have to have an Irish address.

I have heard that an insurance company will not close down your ARF if they subsequently find out that you are not living in Ireland.

But you will have to keep an Irish bank account as they will only make payments to an account with an IBAN number, so they will not make payments to a US bank account. The US will also tax you on your lump sum payment.


This is just an Irish issue. If you have a UK pension, you can't use the pension draw down facility (their version of an ARF) if you don't have a UK address. You are limited to an annuity.

Cashing in your pension is another option.

Like with a lot of things, the US and EU ways of doing things are completely incompatible
 
I think you'll find that different providers have different rules/interpretations on whether they'll mature their pension to an ARF for a non-resident.

Might a work-around be to trasnsfer your pension to a PRSA before you leave these shores and then vest it?

If you had a convertible term policy here, left and moved abroad, the provider is still contractually obliged to convert the policy even though they're technically selling it to a non-resident.

There's full Anti-Money Laundering on ARFs so that means certified ID , certified proofs of address and IBAN.

Haven't dealt with someone in this situation yet so haven't had the need to research it too much. It would probably be prudent to check the rules/interpretation of the provider that the pension is with in respect on non-residency before you leave the Country, just in case Company A says 'No ARF at all for non-resident' and Company B says 'Yeah, we'll do it but not for transfers from other providers'.

But, the legislation/rules may change again by the time you reach the maturity date.


Gerard

www.prsa.ie
 
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Hi Gerard,

Firstly, I acknowledge that you are an expert in this area.

There must be hundreds of thousands of people interested in this question - between Irish nationals wishing or considering to retire abroad and foreign nationals wishing to go "home" for their golden years, etc. Yet, the treatment of the ARF - the preferred use of retirement funds for private sector employees - seems to be a bit of a very large grey area. Like, I'm not expecting my question earlier today to be answered!:)

GSheehy said:
Haven't dealt with someone in this situation yet so haven't had the need to research it too much. It would probably be prudent to check the rules/interpretation of the provider that the pension is with in respect on non-residency before you leave the Country, just in case Company A says 'No ARF at all for non-resident' and Company B says 'Yeah, we'll do it but not for transfers from other providers'.
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Just so I'm clear - if an Irish resident took out an ARF and then rang you up to say he's had enough of the weather here and planned relocating to Spain, you'd have to check if his ARF could continue? Seems extraordinary - in previous posts on ARFees going abroad on AAM, it's been mentioned that they can't get an exclusion order - but never that the ARF itself may need to be discontinued?
 
JimmyB99 said:
if an Irish resident took out an ARF and then rang you up to say he's had enough of the weather here and planned relocating to Spain, you'd have to check if his ARF could continue?
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No. He'd have the ARF set up before he left.


Definitely not an expert in this area.
 
Thanks @GSheehy

GSheehy said:
No. He'd have the ARF set up before he left.
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Again to avoid doubt - you're saying if an ARF is set up before going abroad, it's ok for it to be continued but setting up an ARF for someone after they become non-resident may depend on the insurer?

GSheehy said:
Definitely not an expert in this area.
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If someone was looking for advice on this area, where can they go to get it?!
 
I've already asked around in my employer (big multinational) and gotten ~50 people who are in the same boat. So I agree there are likely thousands in this situation. I've already left Ireland and so the best I could do here is to try to use the Irish address when the time comes to get the ARF (again I'm not recommending this, at best its likely playing loose with the rules)

My current plan is to ask our fund admin for options - I suspect they will make some sort of ARF available that meets the revenue reporting, but will charge mightily for it (I dont blame them, the reporting requirements are tough).

I also plan to pursue all the encashment options.

I'll happily share what I find out but would echo the question - where would a group (of 50 of us now). Get advice on our options.

As to the broader problem "Global Mobility" where this uncertainty makes Ireland less attractive - I'm not much of activist but it seems like a more formal representation to revenue/finance by the large multinationals would be warranted. What's involved in that ?
 
Excellent post, Bing

I'm too am really perplexed by all of this.

Can you reach out to the HR division of your company? I suspect that they must have advisers like Mercer or AON looking after them and it would seem like a completely reasonable request for an adviser like this to advise its client company how the retirement benefits of its employees can be used. I am sure that your employer would be horrified with the idea of an employee (or former employee) having to effectively falsify his address in order to access his retirement benefits. If it's the case that the ARF option isn't a viable option for those abroad at the point of retirement - then that really should be made clear! [I understand that you may not be allowed to reply for some time as you are a new member].
 
JimmyB99 said:
Hi Gerard,

Firstly, I acknowledge that you are an expert in this area.

There must be hundreds of thousands of people interested in this question - between Irish nationals wishing or considering to retire abroad and foreign nationals wishing to go "home" for their golden years, etc. Yet, the treatment of the ARF - the preferred use of retirement funds for private sector employees - seems to be a bit of a very large grey area. Like, I'm not expecting my question earlier today to be answered!:)



Just so I'm clear - if an Irish resident took out an ARF and then rang you up to say he's had enough of the weather here and planned relocating to Spain, you'd have to check if his ARF could continue? Seems extraordinary - in previous posts on ARFees going abroad on AAM, it's been mentioned that they can't get an exclusion order - but never that the ARF itself may need to be discontinued?
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The ARF provider will only want to sell their product to an Irish resident, as they will not be aware of the local regulations applicable to the sale of a financial product to residents of other countries. Once it's set up, it doesn't matter where you go to, only issue will be tax.
 
BingCrosby said:
I've already asked around in my employer (big multinational) and gotten ~50 people who are in the same boat. So I agree there are likely thousands in this situation. I've already left Ireland and so the best I could do here is to try to use the Irish address when the time comes to get the ARF (again I'm not recommending this, at best its likely playing loose with the rules)

My current plan is to ask our fund admin for options - I suspect they will make some sort of ARF available that meets the revenue reporting, but will charge mightily for it (I dont blame them, the reporting requirements are tough).

I also plan to pursue all the encashment options.

I'll happily share what I find out but would echo the question - where would a group (of 50 of us now). Get advice on our options.

As to the broader problem "Global Mobility" where this uncertainty makes Ireland less attractive - I'm not much of activist but it seems like a more formal representation to revenue/finance by the large multinationals would be warranted. What's involved in that ?
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The solution is to transfer the pension to the country your resident in before retirement. You can pretty much transfer to and OECD country, expect the US.
 
BingCrosby said:
My current plan is to ask our fund admin for options - I suspect they will make some sort of ARF available that meets the revenue reporting, but will charge mightily for it (I dont blame them, the reporting requirements are tough).
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You don't know that you might have a problem yet. The scheme administrators should pursue the product provider for a definitive answer. Their fee would include technical queries like this.

If they come back and say they can do it, you're not wedded to the fund administrator to buy it from them. Anyone with an agency with the product provider could execute the transaction.

If the administrators say ' Product provider can't offer you an ARF' , you then go down the road of 'Is this standard across all providers' 'No?' Why is your interpretation of this different?'

You won't have to put your activists hat on. The scheme administrators, with the product provider, should do that.
 
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