Drawdown, ARF Management & Annuity Income

1. Drawing a lump sum when you retire

At retirement, you can usually take part of your pension pot as a lump sum. In Ireland, the maximum is the lower of 25% of your fund value or €500,000. The first €200,000 of lifetime pension lump sums is tax‑free, with the next €300,000 taxed at the standard rate (currently 20%).

How you choose to utilise this lump sum will impact your longer term financial position, for example you may use it to clear debt and reduce monthly outgoings, fund immediate lifestyle goals, reinvest in non-pension assets or choose to take a lower amount and purchase a higher income in retirement or larger ARF.

(In certain circumstances say if you opted to waive your right to a lump sum at retirement when receiving a redundancy payment no tax efficient lump sum is available from the pension that is related to that employment from which you took redundancy.)

2. Approved Retirement Funds (ARF): Flexibility & Control

For many retirees in 2026, the Approved Retirement Fund (ARF) is the preferred choice over a traditional Annuity. An ARF allows you to keep your retirement "pot" invested, giving you the potential for continued growth even after you stop working.

• Investment Ownership: Unlike an Annuity, where your money is gone in exchange for a fixed income, an ARF belongs to you. If you pass away, the remaining value can be left to your estate or spouse.

• Bespoke Portfolio: You retain full control over where your money is invested, allowing us to adjust your risk levels as you move through different stages of retirement.

  
  

The biggest risk in retirement is "outliving your money" or drawing from it at a rate such that it will no longer support a sustainable source of income for the remainder of your life.

To reduce the chances of this happening we help you devise a strategy that seeks sustainability for the ARF whilst also paying you the Imputed Distributions (the mandatory withdrawals required by Revenue).

• Mandatory Drawdowns: Once you are aged 60 or over for the full tax year (effectively from the year you turn 61), Revenue requires minimum annual withdrawals based on the total value of your ARFs and vested PRSAs:

  • 4% per year from ages 60–70, where total ARF/vested PRSA values are €2 million or less,

  • 5% per year from age 71+, where values are €2 million or less,

  • 6% per year at any age if the combined value of all ARFs and vested PRSAs exceeds €2 million.

• Sustainable Withdrawal Rates: Where it aligns with your investment preferences, we aim to balance these required withdrawals with long‑term investment performance so your fund can continue supporting you throughout retirement.

• Inflation Awareness: Our cash‑flow modelling tools factor in the long‑term impact of inflation, helping your strategy stay resilient and realistic over time.

3. Annuities: Income certainty for the remainder of your life

A pension annuity in Ireland provides a guaranteed income for life by converting your pension pot into a secure, regular payment.

For those of good health and low appetite for investment risk, annuities can be a great solution to providing continuous income for the rest of their lives.

Once purchased, the income is fixed or inflation‑linked, giving you certainty and protection from market volatility.

Annuities can also be tailored with options such as a spouse’s pension or minimum payment periods, offering peace of mind that your essential income needs might be met throughout retirement.

ARF vs. Annuity