Approved Retirement Fund (ARF/AMRF)
An Approved Retirement Fund (ARF) is a post retirement contract. On retirement from a pension contract and following withdrawal of any tax efficient lump sum, the balance pension funds can be invested in an ARF. This is subject to first having satisfied a requirement for a guaranteed minimum pension income for life of €12,700 p.a. or having invested the first €63,500 in an AMRF). The ARF was originally only accessible to individuals retiring from personal pension contracts or company directors (5%). This option is now also available to individuals retiring from employer sponsored defined contribution pension schemes, if permitted by the Trust Deed and Rules. This allows many individuals the opportunity to retain their retirement fund for either passing on to their spouse, the next generation or for purchase of an annuity at a later date. It also gives an individual control of their investment decisions.
Who can invest in an ARF?
The NRFM Self-Invested ARF is an option available to:-
- Existing holders of either self-invested ARF’s or ARF’s with insurance companies.
- Holders of vested PRSA’s
- Personal Pension holders
- PRSA policy holders
- AVC policy holders
- Employer sponsored Defined Contribution pension schemes
- SSAPS, subject to certain conditions
- Transfers from DB wind ups, subject to certain conditions
Investment growth generated by ARF and AMRF investments is exempt from income tax and capital gains tax in certain jurisdictions.
Investment choice, control and flexibility
The NRFM Self-Invested ARF offers the holder the opportunity to manage their retirement funds without the investment restrictions usually found with traditional life assurance products. The self-invested ARF is designed for individuals that are comfortable with making their own investment decisions and have a clear understanding of investment risk.
As with all our self-invested products, funds can be spread between a wide range of allowable investments including:
- Direct share dealing facilities through a nominee stock broking account/online platform
- Direct property and syndicated investments
- Bank deposit accounts
- Structured products such as tracker bonds
- Institutional funds including many leading external investment managers
- A variety of collective investment schemes including unit trust arrangements
Unlike a life assurance company, we hold the ARF assets in trust on behalf of the ARF investor. This means that clients’ assets are not held on NRFM’s balance sheet. All accounts are individually designated in the clients name and the client is a co signatory on their investments and individual bank accounts.
Existing pension assets can be transferred in specie to a NRFM Self-Invested ARF. For example, property held in any existing Small Self-Administered Pension Scheme (SSAPS) can be transferred into an ARF. This allows the ARF holder to retain any direct property as a retirement fund asset and have the rental income as a pension.
ARF investments where holders are over age 60 for the full year of assessment, are currently subject to imputed distribution requirements of 4%,5% or 6% annually depending on the size of the retirement fund. AMRFs are not subject to these rules. Capital held in an AMRF is not accessible until the holder reaches age 75, however, any investment growth may be withdrawn.
Competitive and transparent charges
With the imputed distribution requirement on ARFs, keeping management costs down can be as important for safeguarding capital preservation as choosing the right investment strategy.
The NRFM ARF and AMRF are very cost effective for administering retirement funds. There is a single set up cost to the individual and then a simple Annual Management Charge (AMC) which is calculated by applying a percentage based on the entire funds.
100% of ARF funds are invested. This also means we don’t tie clients to any ‘locked in period’ or subject ARF holders to any encashment charges if the client decides to withdraw all their funds (as a taxable income) purchase an annuity or move their ARF to another product provider.
NRFM Self-Invested ARF v Life Assurance Company ARF
For more information please refer to our ARF Brochure or contact your Financial Advisor.