ARF available in defined contribution

Fol20

Hey guys, if you are contributing to a standard company offered pension where they match x amount, Are you able to take your pension out as an ARF at the end of it if say you have rental profit over the 12-13k mark limit?

ANXIOUS

Are you talking about taking out the Arf without an amrf?

Fol20

From what I can gather an arf will force you to take out x amount a year while amrf is not binding until you hit 75.

Basically I would like the freedom to completely control my pension once I hit maybe 50-55 and am hoping as long as I can show them rental income above the threshold of 13k I could put all of my pension pot into a fund where if I decided to, I could take out all in go(a large chunk of it liable for income tax etc if I wanted to) I highly doubt I would do that however I would like to be in full control of it. Currently the company pension is with Irish life if that helps in anyway

ANXIOUS

No, rental income doesn't go towards the €12,700 it's needs to be guaranteed ie state pension or an annuity.

You can invest an Amrf whatever way you like, you will just be able to access 4% per year until it becomes an Arf.

Fol20

Do all pensions offer arf and amrf or do some of them force you to take an annuity? Likewise with an amrf, if you pass away, does the amrf go into your estate similar to an arf?

ANXIOUS

Fol20 wrote: »

Do all pensions offer arf and amrf or do some of them force you to take an annuity? Likewise with an amrf, if you pass away, does the amrf go into your estate similar to an arf?

The vast majority of schemes allow amrf /Arf some just have never got around to updating scheme rules.

Correct an amrf is treated the same way as an Arf.

Fol20

One final question, I’m just trying to do some calculations and I was wondering over a span of 30years, do you think an annual compound interest of 6pc would be fair based on the history of their general performance to date?i know no one has a crystal ball and who knows what might happen but from what I was googling about 6pc seems about right.

Browney7

Fol20 wrote: »

One final question, I’m just trying to do some calculations and I was wondering over a span of 30years, do you think an annual compound interest of 6pc would be fair based on the history of their general performance to date?i know no one has a crystal ball and who knows what might happen but from what I was googling about 6pc seems about right.

5 or 6% seems reasonable over such a long horizon. Do some sensitivity testing near retirement though to reflect a likely asset mix at that point (higher cash and bonds investment)

Even if you don't withdraw 4% of the fund, you'll still pay tax as if you had (deemed disposal/distribution) so it would be foolish not to take 4% from your ARF.

From what you said, your looking to defer income as long as possible so the 63.5k into AMRF is what you'd like. It used to be 123k with an 18k guaranteed income

coylemj

If you have money in an ARF and you are aged 60 or more for the entire year, there is an 'imputed distribution' of 4% p.a. whereby the taxman will assume that you have withdrawn 4% from the fund and tax you accordingly, whether you take the money out or not. So although technically you don't have to make a 4% withdrawal, you'd be crazy not to, otherwise you'd have been taxed twice when you do take that money out.

It goes up to 5% from age 70 i.e. the year in which you are aged 70 for the entire year. Unless you were born on Jan 1st, that means the year after you reach the age of 70.

If you take early retirement before the age of 60, you can put money into an ARF and leave it there. Typically this is done when you have used up your entitlement to a tax-free lump sum and have cash left over, usually from an AVC.