AMRF upon death

B

Bob2018

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Just wondering what happens an AMRF upon death. Does it become an AMRF in my wife's name or an ARF in her name. Thanks.
 
Thanks Gordon. That's what I had understood but I dont understand the logic. Someone with a €1m has to have an AMRF (unless other guaranteed income) but a widow with €50k doesn't. Bit strange?
 
Bob2018 said:
Thanks Gordon. That's what I had understood but I dont understand the logic. Someone with a €1m has to have an AMRF (unless other guaranteed income) but a widow with €50k doesn't. Bit strange?
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I don't have any insight into the logic behind the rules, but there are a number of differences between the treatment of pension funds on death and on retirement. Random selection: -

  • A person who has €1 million in a fund dies before retirement and their spouse can inherit the million as a lump sum without taxation. But if they reach retirement without snuffing it, they can only access a percentage as a lump sum and the balance will be taxed.
  • A person has a deferred benefit in a DC scheme from a previous employment. If they die, the maximum lump sum payment to the surviving spouse is 4 x salary. If they transfer it into a Personal Retirement Bond / Buy-Out Bond and then die, the spouse can get the full fund as a tax-free lump sum.
Regards,

Liam
http://ferga.com
 
The AMRF is a nonsensical concept anyway, so I wouldn’t give it too much thought. Perhaps it’s simply deemed easier and more compassionate to have a widow/widower able to access all of the value if needs be? I’ve always thought that it’s crazy that someone has to have an AMRF to prevent bomb-out risk but can invest it in Nigerian oil futures; equally it’s crazy that someone can be on the breadline but unable to access anything more than 4% of their AMRF.
 
Gordon Gekko said:
The AMRF is a nonsensical concept anyway, so I wouldn’t give it too much thought. Perhaps it’s simply deemed easier and more compassionate to have a widow/widower able to access all of the value if needs be? I’ve always thought that it’s crazy that someone has to have an AMRF to prevent bomb-out risk but can invest it in Nigerian oil futures; equally it’s crazy that someone can be on the breadline but unable to access anything more than 4% of their AMRF.
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Agreed. Nanny-state nonsense. I think the Powers That Be were terrified of the prospect that Sean Bloggs might lose the run of himself and decide to blow his pension fund on drugs and partying within a few years of retirement, if he was allowed unfettered access to his pension fund. So he'd fall back on State supports. Hardly stands up - you've spent perhaps 40 years prudently accumulating a pension fund and suddenly you lose that prudence just because you stop working?
 
LDFerguson said:
  • A person has a deferred benefit in a DC scheme from a previous employment. If they die, the maximum lump sum payment to the surviving spouse is 4 x salary. If they transfer it into a Personal Retirement Bond / Buy-Out Bond and then die, the spouse can get the full fund as a tax-free lump sum.
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Are you sure on this Liam - Steven had a different opinion in this thread.

https://www.askaboutmoney.com/threads/dc-scheme-fund-can-you-just-leave-it-after-nra.207409/
 
In the case of a deferred benefit in a DC plan, the full value is paid to the estate of the deceased. The 4x Salary rule does not apply in this case. They do not have to transfer the value into a PRB/ BOB.
 
Conan said:
In the case of a deferred benefit in a DC plan, the full value is paid to the estate of the deceased. The 4x Salary rule does not apply in this case. They do not have to transfer the value into a PRB/ BOB.
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In a situation as described in this thread where there is a DC scheme relating to a previous employment and a DC scheme relating to a current employment, the Revenue pensions manual suggests that it's not that simple.

"Benefits from Earlier Employment 10.3 For the purpose of the limits set out in the preceding paragraphs, preserved death benefits derived from earlier employments must be taken into account and benefits of the same type from the current employment correspondingly restricted, but- (a) refunds of contributions to the employee by a scheme of an earlier employer may be ignored, (b) small preserved benefits, i.e. lump sums not exceeding €1,270 in aggregate or spouse’s or dependants' pensions not exceeding €330 per annum in aggregate may be ignored, (c) if the lump sum from the current employment does not exceed twice final remuneration (excluding any refund of the employee's contributions) preserved lump sums from earlier employments may be ignored, (d) preserved lump sum death benefits arising from retirement annuity contracts may be ignored."

That said, none of my clients have died in that position so I haven't seen the application of these rules in practice. Or I could be interpreting them wrong. Revenue also say "The provision of pension benefits on death-in-service is an area in which Revenue discretion will be exercised flexibly, especially in the case of lower-paid employees."
 
New Ireland issued a document a while back in relation to payments on death. The key difference is Active and Deferred Member. As long as you are a deferred member, the value of the fund is paid out.

If you are an active member, you are limited to 4 times salary plus the value of any personal contributions that are made.

If you transfer in benefits from an prior employment, it becomes part of your current scheme and the 4 times salary rule applies.

It's more rubbish that doesn't make sense. A personal pension plan and PRSA are paid tax free, but a company pension is limited to 4 times salary except when it's an old pension???? But the 4 times salary can be boosted by the value of the personal contributions that you made!!!! Why not just simplify the whole thing and pay out the full amount tax free.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Precisely Steven. We’re talking about a scenario where someone has died; simplify it and make it as favourable as possible for the grieving widow/widower.
 
Gordon Gekko said:
Precisely Steven. We’re talking about a scenario where someone has died; simplify it and make it as favourable as possible for the grieving widow/widower.
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Won’t change anytime soon, left wing politics will frame it as a give away to the wealthy over those who don’t have a pension, social housing, homeless numbers etc....Optics wins out every time.
 
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