Annuity

F

F. Kruger

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Example Scenario

I have one pension fund of €100,000 with a guaranteed annuity rate and another fund of €100,000 without a guarantee with a different provider.

Can I take the 25% tax-free lump sum of €50,000 from the second policy so as to avail of the higher annuity rate on the first? Or do I have to take the 25% from each one?
 
Would seem to me that one might transfer them both to ARF - then have €200k and take the 25% TF Lump-Sum of €50k from there, but then lose the GAR.

Presuming really want the GAR then I would say that one would have to prove to the provider that trying to take €50k from as a TF Lump-Sum that do indeed have a total pot of €200k and that only taking 25% as a TFLS, and even then I am not sure how they will react?
 
On a more general point, how are multiple pensions considered when it comes to retirement and the 25% lump sum? I'm sure that more and more people, like myself, will have multiple pension funds that they don't consolidate in one place for one reason or another and I just wonder what the implications/practicalities are? Might it be necessary to consolidate them into an ARF at retirement and thereafter take the 25% lump sum from that?
 
It would appear that there is some Revenue ruling on this issue but I awaiting confirmation of same.

The Revenue will only allow the 25% to be taken from each policy/provider.

It's a bit of a bummer for anyone with a GAR as there is 4.5%+ of a difference between the GAR and the Open Market at the moment.
 
Although the 'Rule Book' says that you have to take 25% from each individual fund it is possible to get a concession from the Revenue, provided that steps are taken ensure that 25% Exactly is paid out from the aggregate funds.
 
F. Kruger said:
it is possible to get a concession from the Revenue, provided that steps are taken ensure that 25% Exactly is paid out from the aggregate funds.
Click to expand...

I put this query to the Revenue several months ago and they replied as follows:

"Only a maximum of 25% may be taken from any individual policy.
However, if the funds from the first two policies were transferred to the
third, it would be possible to take the maximum 25% from that policy."

Do the Revenue have different rules depending what mood they are in? :p
 
In truth, these may be grey areas - when Pension and Taxation Legislation is written, perhaps the intention is to cover off general/mainstram areas, that leaves scope for interpretation...and various interpretations!
 
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