How to Take Your Pension Tax-Free & Choose an ARF or Annuity

When you retire in Ireland, one of the most important decisions you’ll face is how to access your pension—starting with the tax-free lump sum, followed by your choice of retirement income strategy.


 

What happens to the rest of my Pension?

  • Upon retirement, you can typically withdraw up to 25% of your pension fund as a tax-free lump sum, with some limits to keep in mind:

    • Up to €200,000 is completely tax-free (lifetime limit)

    • The next €300,000 is taxed at 20%

    • Anything above €500,000 is taxed at your marginal rate (up to 40% + USC/PRSI)

  • An ARF allows your remaining pension funds to stay invested, giving your money the chance to grow while providing flexible access.

    Key Features:

    • Flexible withdrawals as needed

    • Growth potential through ongoing investment

    • Estate planning: Remaining balance passes to your family

    • Mandatory annual withdrawals:

      • 4% from age 61

      • 5% from age 71

  • An annuity uses your pension balance to buy a guaranteed income for life, regardless of how long you live.

    Key Features:

    • No investment risk — fixed income regardless of markets

    • Peace of mind for budgeting

    • Optional benefits:

      • Spouse’s pension (reversionary annuity)

      • Guaranteed payment period (e.g. 10 years)

      • Index-linking to keep up with inflation

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Approved Retirement Fund (ARF)

Flexible.

Low-Cost.

Expertly Managed.

High Performance.

We tailor ARF withdrawals to ensure you have what you need, when you need it.

We keep costs low to ensure maximum returns.

We invest your money correctly, to ensure it lasts as long as you need.

How We Structure Your ARF

  1. The money you withdraw regularly

  2. The money you will need in 3 - 5 years

  3. The money you need in 5+ years

In doing so, we maximize the potential for longevity, so that you can focus on enjoying your Golden Years.

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FAQs

  • No. You can take up to 25% of your pension as a tax-free lump sum.

    You may be able to access the balance, but it will be subject to tax at your marginal rate.

  • You can receive up to €200,000 in tax free lump sums within your lifetime from all of your pension.

    Anything over this will be subject to tax.

  • An ARF is passed to your next of kin. Depending on who receives the ARF there can be tax considerations.

  • An Annuity can be passed to your partner under certain circumstances.

    An Annuity cannot usually be received by your wider estate.