Bewildered by Irish Life Letter

zmccomish · 04-09-2014 8:40pm #1

Received Irish Life letter to effect Vested PRSA Plan had matured and which of 4 options did I wish to take 1. Buy an Annuity 2 Buy an Investment Annuity3 Buy an Approved Retirement Fund 4 Take Funds.
Am retired aging pensioner and while there is not a great deal in the fund,I would like suggestions as to which of these options I should go for.
Personally I think it would be easier to just take the money

dudara · 04-09-2014 10:00pm

Moving to Banking, Insurance & Pensions

dudara

coylemj · 05-09-2014 1:27am

If there's no tax liability and you're at retirement age, take the money into your hand.

If you have exhausted your retirement tax-free allowances because you took a lump sum from another source (e.g. a retirement gratuity/redundancy money from your most recent employer) then put the money into an Approved Retirement Fund (ARF) and by the way you can deposit in any approved ARF provider, not necessarily Irish Life.

If you have only partially exhausted your tax-free allowances then you may be able to take some of the money tax-free and deposit the rest in an ARF.

You say there isn't a great deal in the fund so even if you have to pay tax on it, you might be as well off taking the cash and paying the tax as putting it into an ARF will involve letting a broker take 2-3% of the money and you'll only be able to withdraw it piecemeal over the next 5 years or more.

Whatever you do, do not buy an annuity. The rates are currently terrible because of low interest rates.

Henry Ford III · 05-09-2014 7:59am

Get proper advice.

CyrilFiggis · 05-09-2014 10:15am

Assuming that you only have the one pension:

If you haven't taken any tax free cash up to now (or signed a tax free waiver on receiving a grautity at any stage) you will be entitled to 25% of the fund tax free (you can take up to €200k tax free).

If the remaining 75% of this is less that €20,000 you can then take it as taxable cash. Otherwise you will have to go with an annuity or AMRF/ARF option.

You'd be best off contacting a broker and speaking to them about this to get the soundest advice.

CyrilFiggis · 05-09-2014 10:27am

Note too that taking an ARF is not necessarily straightforward.
If you don’t have a guaranteed income of €12,700pa you must first invest €63,500 into an AMRF (and this money can’t be access until age 70). If you do not have this amount of money, but more than €20,000 after the tax free cash you will have to take an annuity.

Let me stress once again how important it is to speak to a professional about this.

NewCorkLad · 05-09-2014 10:59am

You have not given anywhere near enough information to be able to accurately tell you the right choice, you need to sit down with an independent broker and go through the full details.

The J Stands for Jay · 05-09-2014 4:07pm

OP, are you over 75 or do you have an AMRF or annuity already?

zmccomish · 05-09-2014 5:01pm

Am 75. N ever had an ARF.For the amount in the fund hardly worthwhile employing a professional

SBarrett · 05-09-2014 5:13pm

It's hard give definitive advice without knowing the amount. I am going to assume that you took the tax-free lump sum and the rest was ring fenced as an AMRF under the PRSA, so you haven't taken any money out.

You can also look at withdrawing as much as you can each year whilst staying at the lower tax rate.

If you transfer to an ARF, you will have to take a minimum of 5% out each year. If you don't the Revenue will take the tax equivalent due from the 5% value directly from your fund.

While annuity rates are low at present, they do offer you a guaranteed income for the rest of your life. Expect to get a rate of approximately 6.65% i.e. for every €1,000 you give the life company, they will give you back €66.50 a year. When you die, it's gone (subject to it being paid for a minimum of 5 years).

Steven

The J Stands for Jay · 05-09-2014 5:31pm

Is there anything stopping you from keeping the vested PRSA going? Then you could just withdraw an amount each year to minimise your tax until it was gone. Unless of course you wanted more cash and were willing to pay the extra tax to get your hands on it sooner.

Bewildered by Irish Life Letter

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