What is an AMRF?

An AMRF is an Approved Minimum Retirement Fund. Changes in the Finance Bill 2021 will abolish AMRF’s which were supposed to guard against the risk of running out of money in later life for retirees.

Prior to the Finance Bill 2021, retirees had to lock away up to €63,500 in an AMRF until the age of 75 if their pensions are less than €12,700 a year*. This will not be required when the Finance bill is enacted.

Pension drawdown rules

The rules on retirement are that any time between age 60 and 75 the holder of a pension can draw benefits from it.

You can take up to 25% (maximum tax free €200,000 with balance up to a further €300,000 taxed at standard rate) of the fund (maximum tax efficient fund €2,000,000) as a retirement lump sum. The balance can then be:

  • used to purchase an annuity,
  • invested in an Approved Retirement Fund (ARF), or
  • taken as a lump sum less tax.

It is not necessary for the individual to retire to draw the retirement benefits.

AMRF’s have become redundant because increases in the State pension mean that most retirees now have an income on retirement greater than €12,700.

*Old AMRF rule

The old rule was that prior to being able to set up an ARF and/or withdraw the balance of the fund less tax an individual must have had a personal annual pension income payable for life of at least €12,700 payable per annum known as specified income. This did not apply if the individual was over age 75 or used €63,500 to invest in an ARF and/or to set up a pension. If the specified income test could not be satisfied, the individual had to invest €63,500 or the full value of the remaining retirement fund if less, in the purchase of an annuity and/or in an Approved Minimum Retirement Fund (AMRF). Alternatively, the individual could buy a pension to bring their income up to €12,700 per annum.

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