How can I access my pension benefits?
The way you receive your retirement income depends on the policy you choose. That could be either an Approved Retirement Fund (ARF) or an annuity. It's important to understand how each option works, as well as how you might be taxed, so you can factor that into your plans and make the most of your retirement.
Withdrawing from an Approved Retirement Fund (ARF)
An ARF lets you keep all or part of your retirement fund invested, while withdrawing money when you need to. You can:
- Take regular, fixed amount (before tax) withdrawals
- Take regular withdrawals as a percentage of your policy value before tax
- Increase or reduce your regular withdrawal
- Take lump sums
Withdrawals from an ARF are treated as income and taxed under the Pay As You Earn (PAYE) system.
In December each year you may have to withdraw a certain percentage from your ARF to match Revenue requirements:
- 4% if you're 60 or over for the full tax year
- 5% if you're 70 or over for the full tax year
- 6% if you have combined ARF and vested Personal Retirement Savings Accounts (PRSA) assets of €2 million or more, and you're 60 or over for the full tax year
You'll find more information in the 'Guide to your payments' PDF below.
Withdrawing income from an annuity
An annuity converts the money in your pension fund into a guaranteed income for life. You can:
- Have your income paid as a fixed amount
- Have your income automatically increase each year
- Arrange for your spouse or civil partner to continue receiving income after you die
- Have annuity income paid for a fixed period (called a guaranteed period), even if you die before the period ends
The choice you make affects the income you get. For example, the more income you want your spouse or civil partner to have after your death, the lower your income in life will be.
Annuity payments are treated as income. That means they'll be taxed under the PAYE system and are liable to income tax and Universal Social Charge. You'll find more information in the 'Guide to your payments' PDF below.
How will my pension income be taxed?
When you start to receive income from an ARF or annuity provider like Standard Life, that provider effectively becomes your "employer" for tax purposes.
It's important to allocate any available tax credits you may have to your ARF or annuity provider – that way you'll avoid being taxed at the emergency rate. Revenue will issue a tax credit certificate to your provider, 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.
Warning: The value of your Approved Retirement Fund investment may go down as well as up
Warning: Your Approved Retirement Fund invest may be affected by changes in currency exchange rates
Warning: If you invest in Approved Retirement Fund you may lose some or all of the money you invest
Warning: Income from your Approved Retirement Fund investment may go down as well as up