When it comes to your retirement, you've plenty of options.
How do I start receiving my pension?
Before you start receiving your pension payments you'll need to decide how you would like these payments to be made. You could decide to receive your pension as an,
- Approved Retirement Fund (ARF), which allows you to reinvest your pension subject to minimum requirements.
- Annuity, which pays you a regular income from your pension fund.
Our Financial Planning Team can explain more about these, call them on 1850 804 164.
Early retirement takes careful planning. While there is no mandatory retirement age in Ireland, your employment contract may state when you can take early retirement. Employees who plan on retiring early may need to build up a larger fund to help them through those additional years of retirement. Usually, the minimum age at which you can start receiving pension contributions is 50.
With an Annuity you will receive a regular income for the rest of your life. Annuities may be more suited for people who wish to avoid potential risks, and would prefer a guaranteed income for their retirement. There are three choices you need to make when purchasing an Annuity:
Single Life or Joint Life
A Single Life Annuity is payable for the rest of your life only. With a Joint Life Annuity, a percentage of your pension is payable to your spouse after you die.
If you choose to include a guaranteed period, your pension will be payable for a minimum of the guaranteed period, even if you die during that time.
Escalating or Level
A Level Annuity means your payments remain the same throughout your life. An Escalating Annuity means your payments increase at a fixed rate each year.
What is an Approved Retirement Fund (ARF)?
An ARF allows you to invest all or part of your pension fund after you retire. You can decide on the type of fund you would like to invest in, and the amount of risk you're comfortable with. With an ARF you can still withdraw from your fund on a regular or ad hoc basis (subject to income tax and USC. PRSI may also apply). But it's worth remembering that since your pension is still invested, its value may go down as well as up.
To set up an ARF you must have a guaranteed pension income of at least €12,700 per annum or have invested €63,500 in an Approved Minimum Retirement Fund (AMRF) and/or Annuity.
The minimum requirement for an ARF stated is the current Revenue limit.
Tools to help you choose
Use the ARF or Annuity tool to see which option might be more suitable for you at retirement. There's no right or wrong answer as to which option is better - just which one is better for you.
The information contained herein is based on Zurich Life's understanding of current Revenue practice as at August 2016 and may change in the future.