Mercer Oneview Ireland

Approved Retirement Funds (ARFs) & Approved Minimum Retirement Funds (AMRFs)

A Guaranteed Income for Life, or annuity, may be the right option for someone who needs their pension to provide them with a steady income in retirement. However, if your circumstances are such that you do not require a regular income for life in retirement, you could consider purchasing an Approved Retirement Fund (ARF) or an Approved Minimum Retirement Fund (AMRF).

There are a number of reasons why you might choose to use part of your pension to purchase an ARF or AMRF rather than an annuity. These include:

  • An ARF or AMRF can be inherited
  • An ARF or AMRF can continue to provide tax free investment growth
  • Income can be drawn from an ARF as and when needed, though a minimum income of 4% of the value per annum from the year in which you turn 61, rising to 5% of the value in the year in which you turn 71, must be drawn
  • Income of up to 4% of the value per annum can be drawn from an AMRF if needed, though there is no obligation to draw income from an AMRF

There are several important issues to be considered when purchasing an ARF or AMRF. Fortunately, the process does not have to be complicated. Mercer is available to help.

Should you purchase an ARF?

ARFs can be a smart investment but they are not suitable for everyone. While there are tax advantages to purchasing an ARF, as well as flexibility and the potential for future gains, it is important to realise that an ARF does not provide a guaranteed income for life. As with all major investments, you should be well informed before making a decision. The table below sets out the advantages and disadvantages of purchasing an ARF.



  • You have flexibility and control over your pension fund
  • You can invest in a wide range of assets, with the potential for your pension fund to continue growing
  • You can choose the level of income you want to take each year from an ARF (and, to a maximum of 4% per annum, from an AMRF)
  • When you die, your fund passes to your Estate
  • The decision to buy an ARF is reversible i.e. at a later date an ARF can be used to purchase an annuity
  • You are taking on risk - ARFs/AMRFs can fall in value as well as rise
  • If you withdraw more than your ARF/AMRF is earning, your initial investment will be reduced
  • Your ARF/AMRF could run out entirely due to either or both of poor investment performance and withdrawals, and the likelihood of this increases if you live a long time


Are you eligible for an ARF?

The following categories of pension holder are permitted to transfer all or part of their pension to an ARF at retirement:

  • PRSA holders
  • Personal Pension holders
  • 5% proprietary directors of companies
  • Members of Defined Contribution Occupational Pension Schemes
  • People who have made Additional Voluntary Contributions (AVCs) to a pension scheme

If you fall into any of the above categories of pension holder, to purchase an ARF you must also have approximately €12,700 per annum of guaranteed income for life, typically from a pension source. Individuals who do not have that level of income must place up to €63,500 in an Approved Minimum Retirement Fund (AMRF) before an ARF can be purchased. An AMRF works in a similar manner to an ARF, with the exception that no income can be drawn from the initial AMRF investment until age 75.

Treatment of an ARF or AMRF on death

The table below sets out the tax treatment of an ARF after your death.



Surviving Spouse – Cash Transferred in to ARF in Spouse Name

No tax on transfer to a surviving Spouse’s ARF. All subsequent withdrawals by spouse will be liable to income tax under PAYE. Exempt for Inheritance Tax.

ARF Capital directly to a surviving spouse

The full amount is treated as income of the deceased spouse in the year of death and taxed accordingly under PAYE. Exempt from Inheritance tax

Children over 21 at date of parents death

Tax of 30% (as of 2015) on amount inherited, deducted at source. Exempt from Inheritance tax.

Children under 21 at date of parent’s death

No income tax liability. Amount is subject to inheritance tax.


The full amount is treated as income of the deceased in year of death and taxed accordingly. Balance subject to Inheritance Tax.


Call Mercer

If you are considering purchasing an ARF or AMRF or if you want advice on an existing ARF or AMRF, Mercer can help. A dedicated consultant will help you to define your priorities, assess your desired risk level and select your ARF/AMRF provider and ARF/AMRF funds.

Contact Mercer now on 1890 375 375 

  • The information contained in this website is for information purposes only. It should not be taken in any way as advice. It should not be relied upon as an offer to purchase or sell any of the products that are discussed.
  • The value of investments can go down as well as up.
  • Investments or products mentioned on this site may or may not be suitable for you.
  • Before investing or purchasing any product you should always seek independent financial advice. Mercer can provide independent financial advice if required.

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