If you have invested in a pension and have reached retirement, you may be under the impression that your planning for retirement is now complete. However, the accumulation of your pension fund is just the first stage of the process. You now face critical decisions on how best to avail of your retirement funds and, importantly, how you would like these funds to be invested for you and your family.

The decisions you make once you retire can have far-reaching implications on the quality of your retirement and the income you receive from your pension funds.

What is an ARF and AMRF?

Approved Retirement Funds (ARFs) and Approved Minimum Retirement Funds (AMRFs) are investment funds into which you can invest your pension funds at the point of your retirement.

Once you have invested into an ARF, you can then proceed to withdraw money from your pension fund regularly, in order to provide yourself with an income in retirement.

ARF’s allow you the flexibility to manage and control your retirement funds, and to invest your pension funds in a wide range of different assets, such as:

  • Cash and deposits
  • Equities / shares
  • Bonds / fixed income
  • Real estate funds / direct property
  • Alternatives, such as commodity funds, FX or hedge funds.

Because you may be relying on your ARF as an important source of income in retirement (maybe, along with deposits, dividends and rental income), it is vital that you invest your pension wisely.

The ARF you decide to invest into should offer you:

  • a diversified range of investment options that can meet your changing circumstances over time
  • meet your risk tolerance
  • provide you with flexible income withdrawal options.

Do I have to take an annual income from my ARF?

Yes, there is a minimum income you must take from your ARF each year, which is dependent on your age. You must withdraw:

  • 4% of the value of your fund, if you are over 60.
  • 5% of the value of your fund, if you are over 70.

Once you have taken your minimum withdrawal % annually, you can then take any additional further income as you need it (for example, to help your children start a new business or assist them with a deposit on a home). The ARF income facility is very flexible.

You must pay income tax, PRSI and USC on your pension income.

If I die, will my ARF be transferred to my family?

Yes, one of the  major benefits with this form of pension is that it can be passed to a family member upon  the death of the pension holder.

  • It can be transferred to a spouse or civil partner without payment of CAT or income tax.
  • Benefits payable to a child under 21 are subject to Capital Acquisitions Tax but not to income tax.

Otherwise AMRF/ARFs are treated as if they had been drawn down on death and are subject to marginal rate income tax (or 30% if inherited by a child over age 21) and Capital Acquisitions Tax, if inherited by others.

The benefits above sound good, but are there any disadvantages to an ARF?

  • The pension investments you make are not guaranteed to keep their value, because the assets in which your ARF is invested may not perform as well as expected.
  • There is a risk that the ARF could run out in your lifetime. This could happen if you take income from your ARF at too high a rate, the investment performance is less than expected or you live longer than expected.

That’s why it is key in our opinion that your ARF is invested and managed in a prudent, well-diversified manner.


Your retirement could last a long time. This is time that you have worked hard for, time to spend doing all those things you have always promised yourself.

To ensure you have sufficient income from your pensions to pay for your dream retirement, it is advisable to seek out impartial advice from a suitably qualified financial planner. Someone who can guide you on the best ARF for you, based on your personal circumstances, financial goals and investment objectives.

Gerard O’Brien LL.B LL.M CFP® QFA is a Certified Financial Planner and the Owner of Heritage Wealth Management, a Financial Planning practice based at 27 Cook Street, Cork.

For more information, contact Gerard at gerard@heritagewealth.ie www.heritagewealth.ie

Disclaimer: All data and information provided within this article is for informational purposes only. Heritage Wealth Management Limited makes no representations as to accuracy, completeness, suitability, or validity of any information and will not be liable for any errors, omissions or delays in this information or any losses, injuries, or damages arising from its use.