Retirement tax free lump sum & ARF/Annuity

[johnfenit]

A friend of mine is retiring from an employer defined contribution scheme and he wants to take the max tax free lump sum with the balance of his fund going into an ARF.

1) The pension firm handling this state that he can only avail of ARF option if he takes 25% of the fund tax free.

2) They state If he want take the max tax free element based on years of service, then the remainder of fund has to be used to buy an annuity.

Surely under (2), the ARF option is allowable?

thanks

John

 

[Flybytheseat]

Surely under (2), the ARF option is allowable?

No - the pension provider is correct. If he wants an ARF he should choose option 1.

 

[johnfenit]

many thanks for confirmation, much appreciated.

 

[Fortune]

No - the pension provider is correct. If he wants an ARF he should choose option 1.

The only caveat is that AVC funds are always ARFable regards of the lump sum option