Understanding Pensions

Could you live today on €230 per week?

Which is why we all have to take responsibility for our future. Individuals pay into pensions so that they won’t have to live on €230 per week. The younger you start to save, the easier it becomes. Pensions attract tax relief, making saving even more attractive. For example, Michael, aged 35, earns €45,000 per annum. He saves €250 per month into his pension. Michael is on the higher rate of PAYE, currently 40%. Because of the effect of tax relief, the cost to Michael to put away €250 for his retirement is actually only €150, the other €100 comes from tax relief.

Your Options at Retirement

The options available to you at retirement will depend on a number of factors.

1. Your employment type
2. Your pension type
a. Employer Defined Benefit Scheme
b. Employer Defined Contribution Scheme
c. Personal Pension
e. Your employment status, this may also dictate your drawdown options

In general, a pension pot will be drawn down at normal retirement age in the following manner:

1. A tax free lump sum (normally maximum 25% of fund value, tax free up to current lifetime limit of €200,000), or;
2. A tax free lump sum based on maximum 1.5 times final salary, tax free up to current lifetime limit of €200,000), with the balance used to purchase an Annuity.
3. The balance is normally used to purchase;
a. An Annuity (guaranteed pansion for until death)
b. An Approved Retirement Fund (ARF)
c. An Approved Minimum Retirement Fun (AMRF)
d. A taxable lump sum (subject to certain Revenue criteria being met)

Approved Retirement Funds

An Approved Retirement Fund, commonly referred to as an ARF, is a retirement product which can be purchased from an Insurance Company. The funds are invested as per the client’s fund choice. Every person is different, and Keenan Financial Planning conducts a thorough Risk Analysis to establish the individuals tolerance or aversion to risk and advises the client in selecting an appropriate fund or range of funds.
The ARF is designed to provide a fund from which the client can make withdrawals to supplement their other retirement incomes such as rental income and the state contributory pension. Once over the age of 60, an ARF is taxed as if the client were taking an annual withdrawal of 4%, so in nearly all cases the client will do so.
Like all investment products, fund values can fluctuate, and ultimately the ARF funds can be completely depleted if the client makes significant withdrawals.
The ARF passes to the individual’s estate on death.

Approved Minimum Retirement Fund

The Approved Minimum Retirement Fund (AMRF) requirement was removed in 2022.


An annuity is a fixed sum of money paid to an individual over the course of their life, with payments ceasing on death. When you purchase an annuity from an Insurance Company, they in return pay you a fixed amount until you die. In certain circumstances an annuity purchase is compulsory, this can depend on the scheme rules of you pension. Keenan Financial Planning can compare the annuity rates of the main providers to ensure that you get the most competitive rate on the market. We can also advise you on other features such as guaranteed periods after death, whereby the annuity can continue to pay out for 5 years after your death.

Personal Retirement Bond

Also referred to as a Buy Out Bond is an extremely flexible way to take the proceeds of your previous company pension. The advantages of investing in a Buy Out Bond are

  • You take ownership of the policy, there are no trustees
  • Full range of investment options as any other pension product
  • Access to funds if necessary from age 50
  • Potential to transfer your Buy Out Bond into a new pension scheme in the future
  • Passes to your estate on death

UK Pension Transfers

UK and International Pension Transfers

At Keenan Financial Planning, I can assist you in assessing the suitability and eligibility of transferring your UK pension to Ireland.

For pension transfers originating in the UK, the receiving Irish scheme must be registered with HMRS in the UK and be a Qualified Overseas Pension Scheme (QROPS) arrangement. I have expertise in evaluating your current UK pension, it’s value, and the pension type. There are specific criteria which must be met in order to satisfy you UK pension provider in order for them to permit a transfer. I can help to package and submit the necessary paperwork and also identify a suitable QROPs approved pension scheme for you here in Ireland. For international pension transfer options, we must establish your originating scheme rules and I can help assess if such a transfer is allowable and in your best interests.

The evaluation process involves the following steps:

A financial factfind establishing your current retirement benefits and also your UK benefits.

A detailed analysis to establish if such a transfer is right for you in your circumstances.

Identification of a suitable pension provider here to which to transfer the UK pension benefits

A detailed risk analysis to advise and recommend a suitable investment fund choice for you.

Assistance in completion of all necessary documentation to both establish your new pension here and also to request transfer of funds from your UK provider.

Some important points to note in relation to UK and other International pension transfers:

  • the transfer takes place before pension benefits under the overseas scheme come into payment
  • the scheme member requests the transfer
  • the rules of both the Irish and overseas scheme permit the transfer
  • the trustees or administrator of the transferring scheme comply fully with any transfer rules, regulations or requirements in the other jurisdiction
  • the Revenue authority in the State from which the transfer is made approves/permits the transfer

What’s next?

Get the process moving, contact Gavin at [email protected] and see what option is right for you.