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When you accessed your pension fund, did you invest in an Approved Minimum Retirement Fund (AMRF)? If so, you may now be able to access these monies and not be restricted to only one withdrawal of up to 4% per year, until you are 75 years of age when the policy would automatically convert to an Approved Retirement Fund (ARF) allowing you full access.

Pension legislation stipulates that after you have accessed your tax free lump sum and if you decide to invest the balance in an ARF, as opposed to buying an Annuity, the first €63,500 had to be invested in an AMRF if you did not have a guaranteed annual income for life of €12,700. This essentially refers to pension income. Once it can be demonstrated that you are in receipt of a guaranteed pension income of €12,700 per annum AMRF savings can be accessed; however, with the full State Pension falling short of this figure many pensioners were finding themselves with funds locked in an account that they were unable to access. This has always seemed restrictive, especially for those with modest pension values that may have found the majority of their savings tied up after their tax free payment.

However, the increase in the State Pension at the end of last year, along with Revenue now allowing the State Pension Christmas Bonus to be taken into account, means a huge number of pensioners qualifying for the State Pension now meet the €12,700 guaranteed pension income levels needed to unlock the funds in their AMRF.

If you have this level of income, it means your AMRF should be transferred to an ARF allowing you full access to same. You can make lump sum withdrawals and/or set up a regular income payment to supplement your State Pension. These withdrawals will be subject to Income Tax at your marginal rate.

Not only can you have access to these funds but you are obliged to notify your Insurance Company when you are in receipt of a guaranteed income in excess of €12,700 as an AMRF must be converted to an ARF at this time. Following this change an income, known as an Imputed Distribution, of 4% per annum must be taken from the account and again, this will be taxed at your marginal rate of Income Tax.

The onus is on you to check if this applies to you as the Insurance Companies do not liaise with Revenue; therefore, it will not be done automatically.

I would suggest you speak to your Financial Broker for more guidance as these rules are very intricate and it is in your own interest to make sure you are adhering to legislation in order to avoid any possible penalties in the future.

Robert Downes, QFA RPA is a Qualified Financial Advisor and Retirement Planning Advisor. You can contact him through John F. Loughrey Financial Services by telephone on 074-9124002 or by email on robert@jfl.ie.