Married couple 2 Pensions - How to Optimise

[joebloggs9669]

Hi all,

I'm heading towards retirement. c,1.1M in DC pot. My Wife has c 100K in DC Pot
We both hope to retire in early 60's so quite a gap to when the state pension will pay out..(66 or 67 or 68? depending on all sorts)
We both have some scope to add extra AVC's but want to do it in the optimum way
After retirement we will need c.50K after tax to live on for the household.

I have 2 questions...

1. The requirement to set up an AMRF which will apply.. Is it one AMRF between the couple or does each individual need their own? for my spouse that would mean c.70K of 100K going to AMRF and not touchable until state pension kicks in and meets the min income requirement. That would seriously limit any potential to take an income from that pot (might leave 5K PA from 60 to 66)

2. It seems clear that if both of us were drawing an income from our respective DC pots that our overall tax liability (income, PRSI, USC) up to 65 on c.60K gross would be a lot less than if just one of us was doing so. (4K to 5K extra a year at a rough calculation!) So does it make sense to draw say 45K from the larger pot and 5K from the smaller pot..?

The answers to this may guide me to pay a lot more into my spouses pension in the coming year or two than is currently the case.

Many thanks in advance for any insight.

Joe

 

[Steven Barrett]

Pensions and ARF's are kept separate, so both you and your wife will have to set up AMRF's. After the tax free lump sum and the AMRF is set up, this will leave your wife with a very small ARF of circa €11,500. It may be an idea for her to run down the value of this to maximise the tax relief available to her. She will also be able to take 4% from the AMRF if she wishes.

Regarding withdrawals from the ARF, you both have to take a minimum of 4% from the ARF each year or if you don't, the Revenue will take the tax due on that 4% anyway, so you should both take the minimum from that.

As I said previously, you should look at running down the value of the €11,500 from your wife's ARF and just leave her with an AMRF.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[joebloggs9669]

Hi Steven,

Thanks that clarifies it for me..2 AMRFs are needed so Need to fund wife's ARF as a priority so there is enough left to draw down and get the tax benefit (and the PRSI stamp that comes with it!)

Thanks again

Joe