Benefit of Exercising PRSA before 2011 Finance Bill

[tester12]

Is there a benefit for someone if they have the opportunity to exercise their PRSA befor the 2011 Finance Bill is enacted.

I refer specifically to the increase from 12,700 to 18,000 guaranteed income which means you dont have to be an AMRF if you meet the criteria. I am 63 but within 3 years will have a guaranteed income of 14,000. This means I cannot met the 18,000 guaranteed income but would meet the 12,700 hence no requirement for an AMRF.

Refering to Revenue documentation:

sorry cant post url as I hav'nt made 15 posts



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As a transitional measure, the current guaranteed income requirement of €12,700 per annum will continue to apply for a 3 year period in the case of individuals who have already retired. If they satisfy the existing requirement within 3 years (of the 2011 Finance Bill becoming law) their AMRF becomes an ARF. After this 3 year period, the new higher guaranteed income test referred to above will have to be satisfied.

Does retired mean activation a pension or not actively working.

 

[LDFerguson]

All will be confirmed in the Finance Bill, but my understanding is that if you do withdraw your benefits now, you will have to put €63,500 into an AMRF as you don't currently have the guaranteed minimum income. But when you do get your €14,000 you will be able to convert this AMRF into an ARF, assuming that this occurs within three years.

For the purposes of this, my understanding is that "retire" means only to draw your benefits from the PRSA.

Liam D. Ferguson

 

[tester12]

Thank you that is what I thought also except the actual implementation is in relation to someone who has already retired and was unable to obtain an ARF as they did'nt have the 12,700 guaranteed income they had to put the fund into an AMRF. If within the next 3 years they should have a guaranteed income amounting to 18,000 they will be allowed to convert their AMRF to an ARF. I got this from the relevant Revenue area.

 

[LDFerguson]

Thank you that is what I thought also except the actual implementation is in relation to someone who has already retired and was unable to obtain an ARF as they did'nt have the 12,700 guaranteed income they had to put the fund into an AMRF. If within the next 3 years they should have a guaranteed income amounting to 18,000 they will be allowed to convert their AMRF to an ARF. I got this from the relevant Revenue area.

But this contradicts the Revenue text you quoted in your first post above, which specifically refers to an extension of the existing €12,700 limit in the circumstances you describe.

 

[tester12]

Thank you the text is an exact extract from the revenue document "Pension related changes in Budget 2011". I got a new interpretation which is more in line with the text from the same source.

If you have already retired and taken an AMRF because you did'nt have the 12,700 limit you will now have 3 years from the date of approval of the Finance Bill to obtain this limit and convert your AMRF to an ARF.

This means that someone who retired before budget and did'nt have the 12,700 and purchased an AMRF has a distinct advantage over someone retiring this week who has to meet the 18,000 limit to obtain an ARF? I understand that there is a planned change in that if you obtain the guaranteed income threshold anytime during your AMRF lifetime you can convert to an ARF where previously you had to hold it until you were 75.

I don't have any contacts but I would'nt like to be someone advising someone on PRSA execution at the minute as trying to find out clarification on the details is like navigating a minefield.

The legislation to implement this is the Finance Bill which when approved means the 18000 limit is applied retrospectively to date of approval.

I would appreciate if anyone else has any further information.

 

[LDFerguson]

This means that someone who retired before budget and did'nt have the 12,700 and purchased an AMRF has a distinct advantage over someone retiring this week who has to meet the 18,000 limit to obtain an ARF?

Yes but the €18,000 limit hasn't been implemented yet. This won't take effect until the Finance Bill. So anyone withdrawing benefits now still has until the Finance Bill to avail of the lower €12,700 limit.