Your Retirement Options

Retiring can be daunting enough without worrying about what to do with your pension fund. You have worked hard to save for your retirement so it’s important that you take some time to consider your options.

Below are the four options you can have when you retire. These will depend on your personal circumstances and the type of pension you have. Your financial broker or adviser can help explain these options and help you choose the best options for you.

1. Retirement Lump Sum

You can take a retirement lump sum, some or all of which may be tax-free. The amount depends on the type of pension plan you have.

2. Certainty First - Buy a pension for life (otherwise known as an annuity)

When you hear people talking about a pension this is what they usually mean. A pension for life is a regular income paid to you for the rest of your life. Unless you choose an option to continue it, this income will stop when you die. This means it cannot be passed on to your husband, wife, registered civil partner or dependants. There are other options, just speak to your financial broker or adviser. You have to pay income tax at your highest rate, Universal Social Charge (USC) and any other taxes or government levies due at the time on any pension income you get.

3. Flexibility First - Invest in an Approved Retirement Fund (ARF)

You can make withdrawals from your ARF when you need to but you have to pay tax on withdrawals. Regular withdrawals reduce the value of the ARF and it might run out while you are still alive. You have to take a minimum withdrawal each year from your ARF. If you die an ARF can be passed to your husband, wife, registered civil partner or estate.

4. Take as a Taxable Cash Sum

Depending on the type of plan you have, you may be able to take the rest of your fund, in one go after the retirement lump sum. You will need to pay income tax at your highest rate, the USC, PRSI (if this applies) and any other taxes or government levies applicable on this lump sum at the time.

Your Open-Market Option

You can choose to buy your pension income (an annuity) from any pension provider. If you move to another provider, you may get a higher or lower pension income. When you know what type of pension interests you, you can compare the different levels of income on offer. Your financial broker or adviser can help you with this or you can visit the Competition and Consumer Protection Commission at www.consumerhelp.ie. It is also possible to set up an ARF from a qualified fund manager other than us.

Any advice you get is based on the information you give your financial broker or adviser. So it’s important that the information you give is correct. If your circumstances change let your financial broker or adviser know as their advice to you might change.