Your income in retirement

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)/a Vested PRSA 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) or a Vested PRSA

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, Vested PRSA 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, Vested PRSA 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.

• Guide to your payments