No pension freedom for Irish retirees

S

Steven Barrett

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Reports in The Irish Times and the Independent this morning that "pension experts" have advised against Irish people getting the same pension freedoms that are available in the UK. Who are these "pension experts"? The Irish Association of Pension Funds (IAPF), who's members will lose out the most if people cash in their pensions!!

These are the body that it is heavily rumoured lobbied Charlie McCreevy to impose the AMRF rule, which is a complete nonsense.

The truth is, those who have the ARF option have had the freedom to cash in their pensions at any time (besides the AMRF requirement) since 1999. The fact is, they haven't done it because pensioners aren't stupid. Those sensible enough to save for their retirement aren't going to go and blow all their money on fast cars and bling. I have never had a retiree who has opted to cash in their whole pension fund in one go. The IAPF are just interested in generating more fees for their member.

Rant over


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Merowig,
On the Times article you posted it says Standard life give 4224 on 100,000 @ 4.2 % .
Do these figures add up ?
Means that from 65 to 88 ie 23 years your 100,000 hasn,t grown atall, since in any event 100,000 with nil interest will last 23 years @4224?

@ 4.2% on 100,000 on a loan = repayment of 6,780 per annum over 23 years? So surely an annuity pension should be closer to 6780 not 4224 ?
I presume I am missing something on the figures?
........................
 
Gordon Gekko said:
But you can do that here?

Take your lump sum and liquidate your ARF...
Click to expand...

You don't have to implement an ARF. At retirement, you can take your lump sum and take the rest as taxable cash. The €12,700 guaranteed income rules still apply, so you may have to put €63,500 into an AMRF or use that amount to purchase an annuity. Otherwise, you are free to cash the whole lot in. Pay tax at the marginal rate mind.

Never seen it done.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
SBarrett said:
You don't have to implement an ARF. At retirement, you can take your lump sum and take the rest as taxable cash. The €12,700 guaranteed income rules still apply, so you may have to put €63,500 into an AMRF or use that amount to purchase an annuity. Otherwise, you are free to cash the whole lot in. Pay tax at the marginal rate mind.

Never seen it done.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Click to expand...

I'm aware of that. I have only seen it done where there is aggressive tax planning taking place. In my experience, the AMRF is a nonsense and an annoyance for everyone (notwithstanding any marginal benefits).
 
Gordon Gekko said:
I'm aware of that. I have only seen it done where there is aggressive tax planning taking place. In my experience, the AMRF is a nonsense and an annoyance for everyone (notwithstanding any marginal benefits).
Click to expand...

I thought you would. I was looking for a smilie or something to confirm, so decided to play it safe. ;)

I had a case a few years back of a guy who had to retire due to ill health. There was no chance he would ever live to see age 75 yet he still had to put €63,500 into an AMRF. The AMRF was introduced to protect people from themselves. Yet here was a man who needed money for medical expenses but it was locked away until he was dead...and of course, once you die, the AMRF ceases and it becomes an ARF in the spouse's name!

I'm surprised Noonan didn't get rid of it when was scrambling around looking for money from pension pots...


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
SBarrett said:
Yet here was a man who needed money for medical expenses but it was locked away until he was dead...and of course, once you die, the AMRF ceases and it becomes an ARF in the spouse's name!
Click to expand...
Good God!!! I didn't realize that the legislation was that restrictive! I'm sure there must be many similar cases where lack of access to pension funds has caused unwarranted penury or other major issues for pensioners. Yet the issue has never (to my knowledge) attracted the kind of coverage that it should in respect of these restrictions. Why is that I wonder?
 
Pension freedom? I have discovered that saving for a pension benefits the insurance company rather than me.

I have some small pension savings, about €22,000 that I cannot get at. The comment from the adviser was that the best thing is just to leave it till I'm 75. I had hoped to access the funds to tide me through until I qualify for the state pension.
There is another small employment pension that puts me over the limit for claiming a "trivial pension".

If I take the 25% tax-free, the rest has to be put into an AMRF until I turn 75, (I do not have €12700 guaranteed income), or taken as an annuity. With annuity rates around 4% I would have to survive for 25 years just to get "my" devalued money back. Essentially the insurance companies get to keep my capital and pay me 4% interest.
 
That's the AMRF requirement Gervan. It is very restrictive and in place thanks to the lobbying of the IAPF. Access to the fund has been lifted a bit in recent times. Previously, you could only take any growth over the €63,500 capital amount. Now you can draw down 4% per annum. You can also get your AMRF to purchase an annuity in your own name.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
44brendan said:
Good God!!! I didn't realize that the legislation was that restrictive! I'm sure there must be many similar cases where lack of access to pension funds has caused unwarranted penury or other major issues for pensioners. Yet the issue has never (to my knowledge) attracted the kind of coverage that it should in respect of these restrictions. Why is that I wonder?
Click to expand...

Yes, very restrictive. I wrote to the Revenue about it but there is nothing they can do. They don't have any discretionary powers to the AMRF requirement.

It doesn't get that much coverage because pensions are overly complicated. It's too difficult to write about the various rules that apply when taking this retirement option or that. The press like to keep things in simple terms.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
And what's ridiculous is that it's supposedly there to ensure that people don't exhaust their ARF, but it can be invested in anything (e.g. pork-bellies), so it could be gone anyway.

Add to that the fact that the State Pension comes in at just under €12,700 (which is really just £10,000 in old money).
 
I was going to suggest writing to your local TD but most of that lot are too busy making deals on how to ruin the country in order to stay in power/ position themselves to get into power.


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