What is an Approved Retirement Fund (ARF)?
An Approved Retirement Fund (ARF) is a flexible arrangement that allows you to remain invested in funds after retirement and withdraw money as and when you wish.

When you reach retirement you will have options
1. ARF (Approved Retirement Fund)
2. Annuity
3. A Mixture of both

Let’s Look at an Approved Retirement Fund and what it would mean for you

With an ARF, after you have taken your tax-free lump sum the balance is invested in an approved retirement fund.

You have more control over how your retirement fund is managed

You can remain invested in the market with the ability to take a flexible income in retirement.

The growth on an arf fund is tax free.

All income drawn from an arf is taxable

How Does an ARF Work

when choosing an approved retirement fund you can choose the type of fund you can invest in and the amount of risk you are comfortable with.

You can continue to withdraw from your Approved Retirement fund on a regular or ad-hoc basis (subject to income tax, USC and PAYE may also apply)

Remember with any investment your fund value can go up as well as down

Making the right choice

You have many different options and plans to choose from.

You are not alone in this, Gwen Clarke financial services can help.

Your individual circumstances will dictate which is the right option better suited to you. On your death, the balance in the fund (less tax) will be paid to your chosen dependents. This may be something that is important to you.

The right option is the one which suits you best.

What happens to your pension fund after your death

If you die before retirement and have a personal pension, the accumulated funds form part of your estate and are distributed accordingly. Capital Acquisitions Tax (CAT) may apply.

Your annuity income is usually just for your own lifetime and generally does not go to your dependents when you die. However, there are some guaranteed annuity products that may pay out some benefit to your dependants

If you die after retirement and have invested in an ARF, the remaining funds form part of your estate but are treated as your income in the year of death.

The tax treatment of ARFs when you die depends on who inherits the ARF.

Transfers to your spouse

If the ARF transfers to your spouse, then no income tax or Capital Acquisitions Tax (CAT) is payable. However, your spouse will pay income tax on any withdrawals from the ARF.

Transfers to your children

If the ARF monies are inherited by your child, the taxation treatment depends on the child’s age at the time of your death. If they are aged:

• Under 21, no income tax is payable, although CAT may be payable depending on the total amount inherited.
• 21 or over, income tax at the rate of 30% is chargeable. However, CAT is not payable.

Other transfers

If the ARF monies are inherited by any other person (who is not your surviving spouse or child) both income tax at the marginal rate and CAT is payable.