One of the most confusing things for those nearing retirement is what happens after they mature their pension and take their tax free lump sum. A number of options are available to clients, one of which is the Approved Retirement Fund (ARF) and/or Approved Minimum Retirement Fund (AMRF) option.


Current Revenue rules stipulate that where an individual:

  • Does not have guaranteed income for life of more than €12,700
  • Has not already invested €63,500 in an AMRF

He/she must invest the matured pension money after taking the lump sum into an AMRF until the total amount in the AMRF is at least €63,500 or else use the money to buy an annuity. The balance can then be invested in an ARF. As is the case with your pension, the money in an ARF or AMRF will have to be invested in a fund or funds depending on the level of risk a person is willing to take. The following is a breakdown of some of the main differences between the two.



The key difference between the two is access. You may access the ARF money at any time but it’s important to be aware that withdrawals are subject to income tax and USC (and possibly PRSI). Therefore, taking a large withdrawal could mean paying about half away in tax. You are generally better off taking it in smaller amounts as it is needed but that of course depends on individual circumstances.

The money in an AMRF, on the other hand, is not so readily available. The rules at present state that you may access up to 4% of the value of the AMRF each year. You may not access the full amount until age 75 at which date the AMRF will automatically convert to an ARF. Withdrawals from AMRFs are subjected to the same tax treatment as ARFs.


Number of accounts

An individual can only ever have one AMRF but may own a number of different ARFS across different providers.


Imputed Distribution

ARFs are subjected to annual ‘imputed distributions’ where the owner is aged 61 or more whereas AMRFs are not. An imputed distribution is where the ARF is subjected to a tax deduction based on either 4%, 5% or 6% of the value of the policy. This can be avoided if the policy owner takes withdrawals greater than or equal to this amount within the year. In effect, the imputed distribution means you will have to take an annual amount of at least 4% or more from your ARF which could see its value drop over time.


Note: An AMRF automatically converts to an ARF on the death of the owner and becomes an asset of that person’s estate.


As always, when it comes to personal finances, each person’s situation would need to be looked at on an individual basis. I’d be happy to discuss this with you if you would like to call me on 068 31777 or 087 9308181 or else send me an email at


Gerard Ward

30th March 2017