ARFs and tax

Age:46
Currently contributing max to my pension (dc 535k)
Spouse
44, dc 170k (contributing 25%, employer 8%) plus db 8k per annum at 65.

living expenses approx 40k per annum.

Would both like the optionto retire in 4 years time, hope to have savings of 475k at age 50.

I want to spend the pension fund incurring as little tax as possible

My question, am I correct in thinking that I can stop working, live off the savings for a number of years, draw down a tax free lump sum of 200k at say 55, a further 300k at 20% tax at 60, and then draw down 4% from then on.
my spouse would then draw down in a similar manner from age 60.

We generally advise looking at your allowances on an annual basis and seeking to make full use of your PAYE deduction and starting rate band.

The ARF distributions also count as credits for contributory state pensions so the analysis is a little more involved but essentially you have the right idea.

You would need a series of PRSAs to achieve exactly what you are proposing, we call this phased retirement.

You can crack open a series of small pensions taking some tax free cash and a small tax efficient income.

However most people tick the box in their leaving form and only have “one bite” to get 25% of the fund value as a lump sum.

You can’t take the €200k tax free and then go back later to the same pot and take another chunk at 20% unless you have multiple pensions/fund over €800k

We recommend taking some planning advice a few years out from retirement which allows for more sophisticated solutions than just getting your leaving papers from the occupational scheme and ticking one of the boxes presented to you.

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