Previously I outlined when you can mature a pension. Now I will look at what your options are (under current regulation) once you’ve decided to take your benefits at retirement.


Firstly, you have the opportunity to take a tax free lump sum. Usually this will be up to a maximum of 25% of the fund. However, in respect of employer occupational schemes you may be able to take a larger tax free lump sum using a formula based on your salary at retirement. Almost 100% of the time (there may be the odd exception) it is advisable to take as much Tax Free Cash as possible. Simply because it is TAX FREE!


Now, here is where it becomes a bit more complicated. With the balance of the fund, you have the following options:

  • buy an annuity,
  • reinvest in an Approved Retirement Fund (ARF) / Approved Minimum Retirement Fund (AMRF),
  • take taxable cash, or
  • go for a combination of the options.


Suffice to say this is definitely a situation where there is no general rule of thumb and each individual’s circumstances need to be looked at separately. However, I will give a brief synopsis of each.



An annuity is what some people refer to as their pension. Basically, you purchase an income that is guaranteed to be paid to you for the rest of your life. There are many different types of annuities so it’s worth knowing your options before investing in one.


Approved Retirement Fund (ARF) and Approved Minimum Retirement Fund (ARMF)

I will deal with ARFs and AMRFs in more detail in a separate article so for now I will only give a very brief description. After taking Tax Free Cash, if you decide not to purchase an annuity, you may have the option to invest the balance of your funds into an ARF and/or AMRF. You are able to take taxable drawdowns from an ARF at any time and from an AMRF within certain limits.


Taxable Cash

Provided you have met certain regulatory requirements, you may be able to draw down some or all of your remaining funds and pay tax on it. However, if the amount is substantial it may cause a pretty severe tax penalty so this one is usually best avoided.



Please note the above is just a basic overview; as with almost any major financial decision, there is no ‘one size fits all’ solution. If you would like to discuss your own situation and options, please give me a call on 068 31777 or 087 9308181. Alternatively, you can email me at


Gerard Ward

28th February 2017