Annuity and/or ARF
We will help you compare the features of an ARF and an Annuity, so you can choose which option may be more suitable for your retirement plan based on your own priorities.
An annuity (guaranteed income for life)
Converts the money in your retirement fund into a guaranteed income payable until you die (for the remainder of your lifetime).
The amount of income you are paid is fixed on the date having a plan in place is important to ensure that your standard of living does not fall when you retire.
However, on death, there will be little or no return for your dependents unless your purchased a spouses/dependents pension and/or had a an extended guaranteed period, up to 10 years.
Enhanced annuities are available if you have a specific medical conditions, this may improve the rate of you annuity. Your pension plan should provide an ‘open market option’, allowing you source an annuity from any provider in Ireland.
Annuities provide certainty. You are paid a known pension for the rest of your lifetime.
The following options are available at an additional cost.
(1) An enhanced annuity may be an option depending on your lifestyle and medical history (and financial dependent in the event of joint annuity)
(2) Guaranteed period of up to 10 years even if death occurs during that period
(3) Spouse’s, civil partner’s or dependent’s pension payable for the remainder of joint annuitant’s lifetime even in the in the event of your death
(4) Inflation protection to ensure that your monthly or annual payment keeps pace with the costs of living.
Approved Retirement Fund ARF
Allows you to preserve, manage and control your retirement fund.
ARFs provide flexibility and do not provide longer term certainty. You take investment control of your fund. There is a risk your fund could run-out during your lifetime.
You can invest your money into suitable assets and decide how much taxable income you want to withdraw each year, subject to to minimum withdrawal once you are aged over 61.
Unlikely annuity, it does not provide any guaranteed income, however, any balance of your ARF on death is payable to your dependents.
You can choose and determine the level of income and withdrawals that you wish to take from your fund. LIMITS and RESTRICTIONS apply. For example, from age 61 you must take a minimum withdrawal of 4% per annum from your ARF.
Your ARF can invest in a wide range of assets, with the potential for growth.
On death your fund value at that date passes to your estate. Benefits may be taxable in the hands of your beneficiaries.
IMPORTANT - you can use your AMRF/ARF to buy an annuity at any stage in the future.
All things being equal as you get older annuity rates get better, however, your available fund may be lower - due to withdrawals and/or investment performance.
Research has proven that those that engage with a professional advisor at least once a year are more financially confident.
More savings and investments
More likely to have a retirement plan
More financially protected in the event of illness, accident, diagnosis of a specified illness or even death
More secure and confident about their future
Higher annual savings, larger pension funds, wealth growth, adding considerably to your financial well being and helping you achieve your goals.
Source; Ireland (Standard Life report), UK (Unbiased/Standard life report), Australia (KPMG Econtech report) and Canada (CIRAMNO report).