I have an APF pension monthly income and I notice that it has reduced by €43 in one month. I rang to enquire and they said it was due to market performance. Should I be concerned? What options would I have to avoid major loss if this is only the beginning of markets declining? I have a substantial amount of funds in this pension.
ARF monthly income has dropped 43 euro in one month
- Thread starter Chrisi
- Start date
Markets rise and fall all the time - that’s the nature of the beast.
The current volatility is largely a result of Mr Trump’s apparent plans to thrash the global economy.
If you are really uncomfortable with the volatility inherent in an ARF, then perhaps you should consider purchasing an annuity.
The current volatility is largely a result of Mr Trump’s apparent plans to thrash the global economy.
If you are really uncomfortable with the volatility inherent in an ARF, then perhaps you should consider purchasing an annuity.
If you're not already at an age where you're effectively obliged to take 4% (or 5%) then another option might be to take a fixed amount that is a lower percentage?
Maybe if you post more details (age, amount in the ARF, what it's invested in, etc.) or maybe even do a full money makeover, you might get more useful feedback.
Maybe if you post more details (age, amount in the ARF, what it's invested in, etc.) or maybe even do a full money makeover, you might get more useful feedback.
Hi JPD, ClubMan, to be honest I've only been receiving the monthly income since late last year and I can see December to Feb it was €799 and now it's €753. I'm quite new to this and am probably panicking about nothing.. Liberation day today so will see what happens then! I'm not sure what it's invested in but I know it's low risk.
It would help to clarify what it's invested in.
(And how was that asset allocation chosen?)
If it's invested in something other than cash then the ARF fund value will presumably fluctuate based on relevant market factors/sentiment and so your 4% monthly payout will also fluctuate?
(Actually, even some "cash" funds may fluctuate slightly in value according to interest rate changes but the fluctuation should be marginal compared to other asset classes where some market determines their value).
If such fluctuation in payments is a problem for you then maybe you need to discuss this with your pension advisor?
As mentioned above an annuity might be one option or maybe drawing a fixed amount rather than a percentage?
On the other hand, at 65 are you also eligible to claim the Benefit Payment for 65 year olds and will you be eligible for the Contributory Old Age Pension from age 66 which would give you another income stream to help buffer such fluctuations?
www.citizensinformation.ie
www.citizensinformation.ie
Or maybe you also have other income streams?
In short, if you are drawing 4% from an ARF that is invested in assets that fluctuate in value then you should probably expect the monthly payment amount to also fluctuate.
(Unless pension providers do something like calculate 4% of the ARF value at the start of the year and then pay that pro-rata at 1/12th of that amount each month so that the payment doesn't fluctuate? Or they offer that option?)
(And how was that asset allocation chosen?)
If it's invested in something other than cash then the ARF fund value will presumably fluctuate based on relevant market factors/sentiment and so your 4% monthly payout will also fluctuate?
(Actually, even some "cash" funds may fluctuate slightly in value according to interest rate changes but the fluctuation should be marginal compared to other asset classes where some market determines their value).
If such fluctuation in payments is a problem for you then maybe you need to discuss this with your pension advisor?
As mentioned above an annuity might be one option or maybe drawing a fixed amount rather than a percentage?
On the other hand, at 65 are you also eligible to claim the Benefit Payment for 65 year olds and will you be eligible for the Contributory Old Age Pension from age 66 which would give you another income stream to help buffer such fluctuations?
Payment for people who retire at 65
If you retire at 65, you may qualify for a benefit payment until you reach 66. The payment is similar to Jobseeker’s Benefit, but you don’t need to be looking for work or sign on at your local Intreo centre.
Applying for the State Pension (Contributory)
From 1 January 2025, if you apply for the State Pension (Contributory), there is a new way of calculating your rate of payment.
In short, if you are drawing 4% from an ARF that is invested in assets that fluctuate in value then you should probably expect the monthly payment amount to also fluctuate.
(Unless pension providers do something like calculate 4% of the ARF value at the start of the year and then pay that pro-rata at 1/12th of that amount each month so that the payment doesn't fluctuate? Or they offer that option?)
Last edited:
How do you know it's low risk if you don't know what it is invested.
Besides "low risk" is not necessarily what you think of as low risk. Depending on your overall financial position, "low risk" might not be the correct investment option.
In your position I would take a more active role in your ARF and try to understand exactly what you have invested in. Did you not get advice when it was setup?
Besides "low risk" is not necessarily what you think of as low risk. Depending on your overall financial position, "low risk" might not be the correct investment option.
In your position I would take a more active role in your ARF and try to understand exactly what you have invested in. Did you not get advice when it was setup?
Your monthly drawdowns are set for 2025 based on the value of your ARF on 30th November 2024.
The monthly drawdowns don't change throughout 2025 no matter what changes of valuation take place to your ARF during 2025.
If you received less for 1 month it must be based on an error in the first few months drawdowns or an income tax adjustment.
The monthly drawdowns don't change throughout 2025 no matter what changes of valuation take place to your ARF during 2025.
If you received less for 1 month it must be based on an error in the first few months drawdowns or an income tax adjustment.
Last edited:
A fund with an indicative equity range of 50%/75% would be down that amount in the last month.
It's normal enough.
Eithrr you weren't listening when the fund was being recommended (based on your risk profile) or it just wasn't explained to you very well. There was very little movement in the markets from Dec to Feb.
It's normal enough.
Eithrr you weren't listening when the fund was being recommended (based on your risk profile) or it just wasn't explained to you very well. There was very little movement in the markets from Dec to Feb.
Steven Barrett
Registered User
- Messages
- 5,408
There's no such thing as low risk. All assets have risks.
What they really mean is low volatility. What called "low risk" usually has a lot of bonds in it. Bonds had one of their worst years ever in 2022 when they fell by -15%. If equities have one of their worst years ever, they will fall by -50%.
And while the downside is greater, so is the upside. Equities were also down in 2022, falling -13%. But they returns 19.5% and 26.5% in the following years. Bonds returned 4.7% and 0.8%
If you are going to opt for an ARF over an annuity, it is important you know where you are invested as you will have this volatility for the rest of your life. Go back to your advisor and ask them to explain it to you again.
Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Possibly dumb question but...
How is a 4% ARF/vested PRSA monthly payment normally done?
Edit: oops - only saw @S class's post on this now:
But @ginslia seems to have encountered a different approach (my point #1) so maybe there are different options for how the monthly amount is arrived at?
How is a 4% ARF/vested PRSA monthly payment normally done?
- 4% of the fund value each month divided by 12 resulting in a fluctuating monthly amount?
- 4% of the fund value at some point in time (start of the year?) divided by 12 resulting in a fixed monthly amount?
- Something else?
Edit: oops - only saw @S class's post on this now:
ARF monthly income has dropped 43 euro in one month
I have an APF pension monthly income and I notice that it has reduced by €43 in one month. I rang to enquire and they said it was due to market performance. Should I be concerned? What options would I have to avoid major loss if this is only the beginning of markets declining? I have a...
www.askaboutmoney.com
ARF monthly income has dropped 43 euro in one month
I have an APF pension monthly income and I notice that it has reduced by €43 in one month. I rang to enquire and they said it was due to market performance. Should I be concerned? What options would I have to avoid major loss if this is only the beginning of markets declining? I have a...
www.askaboutmoney.com
Last edited:
Re “Your monthly drawdowns are set for 2025 based on the value of your ARF on 30th November 2024.”
This is how I thought my ARF drawdowns would work, but turns out some companies (Irish life for me) do it based on the fund value at the first of each month, and draw down the selected %/12, so sometimes you’re up and sometimes you’re down.
If you’re over 60/61, they reassess at the year end payment to check that you’ve drawn the minimum for the year, and increase the final payment if not.
This is how I thought my ARF drawdowns would work, but turns out some companies (Irish life for me) do it based on the fund value at the first of each month, and draw down the selected %/12, so sometimes you’re up and sometimes you’re down.
If you’re over 60/61, they reassess at the year end payment to check that you’ve drawn the minimum for the year, and increase the final payment if not.
This isn't true for all providers.
Below is some information from a thread I started March last year 2024 regarding same subject.
As far as I’m aware, there may also be an option to take a regular numerical distribution provided it is equal to or greater than minimum deemed distribution.
As far as I’m aware, there may also be an option to take a regular numerical distribution provided it is equal to or greater than minimum deemed distribution.
- take monthly 1/12th of a percentage of fund portfolio value calculated at start of year. Any shortfall of deemed distribution addressed at end of year.
- a monthly 1/12th. of a percentage of fund portfolio value calculated on a monthly basis (this would give more of an average over the year). Any shortfall of deemed distribution addressed at end of year.
- a single annual distribution at end of year based on fund portfolio on 30th. Nov. value.
Colm Fagan
Registered User
- Messages
- 755
For what it's worth, my approach (with a self-administered ARF) is that I decide on a regular monthly income at the start of each year, which is generally less than one-twelfth of 6% of the value of the fund (I'm obliged to take at least 6% a year). I keep the monthly withdrawal at that amount unless something terrible happens during the year. Then, if I'm lucky, I can make a "bonus" withdrawal in December, to ensure that I take the 6% in total for the year. If it's a good year on the stock markets, I get a good "bonus" in December; if it's bad, I get a lower bonus. Occasionally (thankfully, only very rarely since I started the ARF over 14 years ago), the return for the year has been so poor that I have either to breach the 6% (in order to maintain my income) or cut back on my regular monthly withdrawal - take a pay reduction!!
Colm Fagan
Registered User
- Messages
- 755
As a PS to my earlier post, it now looks as if I’ll have to take a significant pay cut this year or alternatively, withdraw more than 6%, which is inefficient from a tax perspective. A reduced/zero bonus at year end will not be enough - unless markets make a phenomenal (and unlikely) recovery by December.
The performance update for my ARF to 31 March (#126) told of a 4.8% fall in the three months since year end. It fell another 7% in the four days 31 March to 4 April!
The performance update for my ARF to 31 March (#126) told of a 4.8% fall in the three months since year end. It fell another 7% in the four days 31 March to 4 April!