What is a Deferred Defined Benefit Pension?

A Deferred Defined Benefit Pension is a pension which is linked to your salary and service of a previous employer. Having a deferred Defined Benefit Pension Scheme means that you were once a member of a pension scheme, but you left before retirement age. You have therefore retained your pension with your previous employer. A deferred pension is also called a “frozen pension” or a “preserved benefit”.

What is a Buy Out Bond?
A buy out bond (also known as a personal retirement bond) is a policy that is used as a new ‘home’ for a pension from either a previous employer’s pension scheme or a current employer’s pension scheme if it is being wound up. A Buy Out Bond gives you control over how and where your pension is invested. The benefits include access to your retirement fund from age 50 and full control over the investment in a wide range of investment funds.
What is an Approved Retirement Fund?

An ARF is a flexible investment fund that you own personally and can manage and control during retirement. With an ARF you can invest the balance of your retirement fund, after you have taken your lump sum at retirement, in a wide range of different investment funds. You can also make withdrawals from your ARF as you need to (you must withdraw a minimum of 4% of your fund each year from the year you first reach 61. The minimum withdrawal will increase to 5% from the year you reach 71.). And because you own your fund, you can leave the balance to your dependants when you die.

Before you invest in an ARF, you must meet one of the following conditions:

  • You must be in receipt of a guaranteed pension income payable for life of at least €12,700 a year.
  • You must already have invested at least €63,500 of your retirement funds in an AMRF or in the purchase of an annuity.
What is a Approved Minimum Retirement Fund?

An AMRF is similar to an ARF, but with three key differences:

  • The maximum you can invest in an AMRF is €63,500 and you can only have one AMRF at any time.
  • You can make a withdrawal of up to 4% of your fund each year. No other withdrawals can be made until age 75 or you start receiving a guaranteed pension income payable for life of at least €12,700 a year.
  • You are not required to take a minimum withdrawal from your AMRF each year, even if you are aged 61 or over in that year.

As soon as you reach the age of 75 or earlier if you can prove you are in receipt of a guaranteed annual pension of at least €12,700 per year payable for life, your AMRF converts automatically into an ARF.