If you retire early, are you required to purchase an Annuity with part of your Pension Pot before you can invest in an ARF ?

[Benbulben]

Hi Everyone

Looking to see if anyone can help with this question.

It is my understanding that if you retired at 66 (under the current legislation) you could use the State Pension to satisfy the mandatory €12,700 "guaranteed income per annum" requirement prior to setting up an ARF.

What happens if you were to retire earlier ? Suppose you wanted to retire at 60, would you be forced to purchase an annuity that would guarantee a €12,700 per annum income or could you avoid this by saying that the State Pension in 6 years time would satisfy this criteria ? Or would you be able to point to your tax free lump sum or other investments and show that provided it is more than €76,200 (€12,700 x 6) it satisfies the criteria before the State Pension kicks in ?

At today's rates, a €12,700 straight Annuity (with no second life included or keeping rate with inflation etc.) would cost circa €275,000. Depending on the size of your pension pot this could take a sizable chunk away and depending on the timing of your retirement it could cost much more.

Thanks for any insights people might be able to offer.

 

[AAAContributor]

It is my understanding that if you retired at 66 (under the current legislation) you could use the State Pension to satisfy the mandatory €12,700 "guaranteed income per annum" requirement prior to setting up an ARF.

The guaranteed pension income requirement no longer applied since 1 Jan 2022.

Here's some commentary on the topic.

 

[Benbulben]

Thanks very much AAA