Retirement Options

Retirement Options

Exploring Retirement Options is a pivotal financial journey, laying the groundwork for a secure future. In Ireland, there are two main structures, ARF (Approved Retirement Fund) and Annuity, which offer flexibility tailored to individual needs. From pension schemes to investment portfolios, navigating these options is crucial for long-term financial stability.

Mark Cahill Financial Services is dedicated to guiding you through these choices, ensuring a comfortable retirement path.

- Have You Recently Joined the Workforce?

- Have You Been Working Without a Retirement Plan?

- It's Time to Plan Your Future Retirement Options.

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Retirement Options: ARF (Approved Retirement Fund)

When you reach your retirement age, and you’ve taken your tax free lump sum, although annuity rates are at higher levels again, more and more retirees are choosing the ARF option, as a more tax efficient option. This option has been made better by the abolishment of the AMRF, whereby €65,500 no longer needs to be invested until age 75 with ARF option at chosen retirement age.

Benefits of ARF (Approved Retirement Fund):

  • The value of the fund can remain invested in a fund and can grow of fall in line with how the fund performs. It’s important to choose your investment wisely when retiring 75% of your pension after tax free lump sum is taken. This is because in most cases a retirees has stopped working limiting income capacity, so investments that are high risk investments aren’t advised for ARF investors. We advise across many suitable investments for our mature clients ranging from Government Bonds, Capital Secure products and life insurance multi-asset investment to meet desired investment risk profile.
  • The ARF can be used to buy an annuity at a later time if annuity rates improve or buying an annuity suits your needs.
  • The value of your ARF passes completely over to your spouse who can continue to benefit financially, if you suffer an untimely death.
  • Passing ARF assets to a child involves either income tax or CAT depending on the age of the child beneficiary.
  • Minimum drawdown from an ARF from age 61 is 45, from age 71 is 5%. There is no minimum drawdown for ARF’s that are a result of early drawdown from age 50 onwards but the 4% minimum withdrawal will begin to apply the year the owner of ARF turns 61.
  • Choosing the ARF option can be beneficial to those that are forced into drawing down pension benefits during a market downturn, whereby fund can remain invested at 75% of amount invested until market recovers and at this point fund switching into a lower risk option can be actioned.

As an ARF is a post retirement vehicle and is not recognised as a pension by Revenue, larger pensions can be moved to Malta in order to hold assets in trust, whereby assets are protected from creditors. Further advantage of transferring pension funds to Malta are in the event of death of pension holder, assets held in trust are paid tax free to the spouse, provided the spouse is the nominated beneficiary.

This can compare to larger ARF’s in Ireland whereby income tax is payable on distributions above tax free limits.

retirement options General Image of retirement structures such as annuity

Retirement Options: Annuity

When retiring from a company pension structure or Master Trust structure, you have two tax free lump sum options. One is to take 25% of your fund tax free. The other is to take 1.5 times your final salary (average of best three consecutive salaries over the last ten years). If you opt for the second option, you must buy an annuity with the remainder of your fund, i.e. the ARF option is no longer available to you.
With an annuity, you effectively use your fund to buy a pension for the rest of your life. Annuities are becoming more popular again because of rising interest rates.

For example, if you have a fund of €300,000 and you opt for a Single Life Annuity of 5.4%, the life insurance company will pay you €16,400 per year for the rest of your living years. **This example is for illustration purposes only.

Talk to Us About Different Rates Available Today.

Benefits of Annuity:

  • For budgeting purposes, you know exactly how much income you will have for the remainder of your life.
  • You are not confined to a single life annuity.
  • If you are married, you can opt for a joint life annuity, passing the benefit over to your spouse, at an actuarially adjusted lower rate.
  • If you are in poor health, you can opt for an impaired life annuity, at an actuarially adjusted higher rate.

Types of Annuity:

  • Single life annuity: This pays you a fixed amount every month until you die. It does not provide any income for your spouse or partner after your death, however this will provide a higher annual payout than a joint life annuity.
  • Joint life annuity: This pays you a fixed amount until you die, and then continues to pay a percentage of that amount to your spouse or partner for the rest of their life. You can select the percentage that suits you, such as 50%, 66%, 100%.
  • Level annuity: This pays you the same amount every month throughout your life.
  • Escalating annuity: This pays you an amount that increases on a yearly basis by a fixed rate, such as 3%. which protects your income from rising inflation.
  • Enhanced annuity: This pays you more than a standard annuity if you have a medical condition or lifestyle factor that reduces your life expectancy.
How to Get Started

Whether you’ve recently joined the job market, or you’ve been working for 40 years – you need to start thinking about your retirement options now. Follow the steps below to get started with Mark Cahill Financial Services.

Step 1: Contact Us

Contact us and Speak to Mark Cahill.

Step 2: Information

Provide us with some information on your current situation and what you're looking for.

Step 3: Advice & Next Steps

We will provide you with advice and next steps to get started.

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