Your income in retirement
How you'll receive your income in retirement depends on the type of post-retirement policy you opt for, which could be an approved retirement fund (ARF) or an annuity.
Understanding how you'll receive your income will leave with you more time to make the most of your retirement.
Taking income from an ARF
With an ARF, you can keep all or part of your retirement fund invested but you can withdraw your money when you need to.
- Take regular withdrawals of a fixed amount before tax or as percentage of your policy value before tax
- Increase or reduce your regular withdrawal
- Take lump sum withdrawals
Any withdrawals from an ARF are treated as income and taxed under the PAYE system.
Each year in December, you may have to withdraw a certain percentage from your ARF to match Revenue requirements. You can find more information in the Guide to your payments PDF below.
Taking income from an annuity
An annuity converts the money in your pension fund into a guaranteed income for life.
You can choose:
- to have your annuity income paid as a fixed amount or have it automatically increase each year
- for your spouse/civil partner to get an income after you die
- to have your annuity income paid for a fixed period only if you die. This is known as a guaranteed period
The choices you make will affect the level of income you get, for example, the more you want your spouse/civil partner to be paid after your death, or the longer the guaranteed period, the lower your income will be.
Annuity payments are treated as income and taxed under the PAYE system. You can find more information in the Guide to your payments PDF below.
Understanding tax on retirement income
When you start to receive income from an ARF or annuity provider like Standard Life, the provider is your “employer” for tax purposes.
It’s important to allocate any available tax credits to your ARF or annuity provider to avoid being taxed at the emergency rate. When you allocate tax credits to an employer, a tax credit certificate is issued to the employer by Revenue, which tells them how to apply tax to your retirement income.
There's an example of a tax credit certificate in our Guide to your payments PDF below.