Non residents - risk of no ARF option

LDFerguson said:
How many non-resident ARFs are out there?
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However many there are it is only going to grow.

Census 2022 shows that 560k workers in the economy hold non-Irish citizenship, 23% of the labour force. It's probably €600k now. Many of these workers are contributing to DC schemes and many will not retire in Ireland.

There is surely going to be growing demand for non-resident ARFs.
 
Dr Strangelove said:
Census 2022 shows that 560k workers in the economy hold non-Irish citizenship, 23% of the labour force. It's probably €600k now. Many of these workers are contributing to DC schemes and many will not retire in Ireland.
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They might also hold Irish citizenship and/or plan to stay here? It's no trivial matter to up sticks and go abroad in retirement even if you have strong links there.
 
And it will become easier and easier to move around the EU as time passes. That's the idea anyway. The UK is currently outside the EU but who knows if that will remain the case. There is definitely an ever growing market for non-resident ARFs. Time will tell how the providers respond to that market I suppose. I might just "move home" to take out an ARF and then "move away" afterwards.
 
To whomever asked this back in October:

I’ve done some investigation into this.

There’s no Revenue legislation saying you must be a resident. (I have checked the Tax Consolidation Act(s) 1997 and Chapter 23 of the Revenue’s Pension Manual.

However, first line Helpdesk/inquiries in an ARF provider will just say no.

I’ve a pension with <provider> and a broker cut through the red tape and asked a knowledgeable person.

No issue with non-resident if transferring current pension over to ARF product in same provider.

(Fees/what funds you can invest in etc. are a separate/standard issue)

Next hurdle is how to disentangle my self from the “PRSI” (social insurance) system in foreign country so I can use the ARF to make Class S contributions. (Can’t contribute into 2 systems at the same time)
 
Hello

OP here - thanks for posting. As I understand it, the issue isn't that I would be restricted from purchasing an ARF (so you are 100% correct that there is no block on this), its that the taxation rules are so onerous that many providers will not sell to someone who is non-resident. In my case, the trustees, after being made aware, have made an ARF from a large provider available to non-residents. I also found other providers who would do the same but the costs were relatively high. As always YMMV.
 
>>its that the taxation rules are so onerous that many providers will not sell to someone who is non-resident.

OK, thanks. Maybe that's the reason I can't make any progress when I make inquires. In my case the DTA between IE and NL specifically grants Ireland the right to tax the ARF distribution (S.I. 459/2019) so it should be standard enough payrolling...

(Edit: I see the original PWC article already mentions this)
 
Hi All

I am new to the forum and am interested in this topic.

I left Ireland over 10 years ago and had 3 DC Pension Schemes. 2 were Company sponsored and 1 was a Retirement Annuity Contract (RAC).

18 months ago, one of the Company schemes was closing down (as the employer was ceasing trading and dissolving). I and other members were presented with options where we needed to transfer out (either to another Company scheme which wasn not an option for me) or to a PRSA.

I got some advice and was told that moving to a PRSA would "Land Lock" this pension to Ireland and it could never be moved overseas (i.e. it would always be subject to a revenue deduction when it came into payment but there may be some ability to reclaim this under a Double Tax Agreement [DTA]).

Since I still had 10 or so years to a normal retirement date, I moved this fund to Malta. There are quite a few advantages with Malta as long as your retirement country has a DTA with Malta. This was facilitated by the advsier and it all went quite smoothly. Apparently Malta will not apply any deduction to payments (at source).

In time, I will likely do this with the other Company sponsored scheme but there is no rush since the charges levvied in ireland on this company scheme are less that the Malta based one. The adviser suggested holding off until closer to retirement.

My problem is with the RAC. My advisor is investigating how this might be best handled but the main thinking was that an ARF might be the least worst solution. Hence I am worried when reading this thread that this option might not be availabe to a non resident. I see on this thread that transferring this to the UK might be an option (I have 1 similar DC scheme in the UK but I am not resident there).

My initial research is that ARF outfits such as Davy do not have a restriction on being Irish resident for a new ARFs (I did and AI search and found no restriction mentioned)

I'd welcome any updates on this subject. Thanks.
 
IR_ExPat said:
My initial research is that ARF outfits such as Davy do not have a restriction on being Irish resident for a new ARFs (I did and AI search and found no restriction mentioned)
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As a non-resident with pensions in Ireland I have also been looking at the ARF route and on the basis of the PWC article in the post below, it seems that an ARF is not a practical option. Even if you get a provider in Ireland to set one up, there is a high risk of double taxation and other complications, except Germany and Netherlands which cover ARFs in their DTAs with Ireland.

Non residents - risk of no ARF option

I've an Irish DC pension, but no longer live in Ireland (USA). I believe the below may apply to anyone non-resident when it comes time to purchase ARF. I've recently learned from a PWC article (cannot link it here - search "PWC ARF non resident") that the revenue has suggested onerous ARF...
www.askaboutmoney.com

Sadly this does not seem to leave me with any realistic option other than an annuity, which I'm not keen on at all. For now I will just leave my pensions invested as they are performing well and no near-term need to draw on them.
 
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ClubMan said:
This?
www.pwc.ie

Changes to Approved Retirement Funds (ARFs) for non-Irish residents

The Pensions Manual dealing with the taxation of ARFs for non-Irish residents has been updated. This article reviews pension planning considerations for globally mobile employees.
www.pwc.ie www.pwc.ie
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Dear @ClubMan, Is there any chance you saved this document and can share it here? It is no longer available on the PWC website. I found it very useful for my own situation living abroad with pensions in Ireland.
 
Having done some research, it appears that my overseas country does indeed have a CAPITAL clause in the DTA with Ireland, meaning that my withdrawal from an Irish ARF would be almost completely taxable outside of Ireland and in my resident country. It might be a few years yet until I test this but hopefully there will be more updates on this issue in the next few years
 
Some ARF products sold by life assurance companies are structured as unit linked funds, where
they invest their pension pot into a pooled fund and own units in that fund. The ARF owner, in
these cases, simply owns a share of that fund (that is, the units); they are not the beneficial owner
of the underlying assets in the fund. Where the disposal of the units gives rise to a gain, this is
treated as income for the purpose of the ARF distribution and any available DTA relief.
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Taken from the form to claim back tax.
If I understand that correctly, it means that if your ARF is entirely invested in funds provided by the Life Insurance companies such as Zurich or Standard Life etc, then the amount you draw down each year is all treated as "income". I imagine that most countries that have a DTA agreement with Ireland have a clause that states who has taxing rights for "income".
If I am correct, then that could make the tax situation a lot more simple for those ARFs fully invested in funds. Does that sound right?
 
Where the disposal of the units gives rise to a gain, this is treated as income for the purpose of the ARF distribution and any available DTA relief.
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Persius said:
the amount you draw down each year is all treated as "income"
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I read it differently. My interpretation is that it means just the "gain" is treated as "income".

The amount you take out from the ARF needs to be separated into income, capital gain and capital parts. Income and gains then need to be separated by the periods you were resident vs non-resident. There are definitions about which categories your draw-downs fall into. The tax treaties treat these categories different. I'm sure with a bit of deeper study I could work it out, maybe get an accountant to help if needed, but you'd also need your ARF fund manager to do likewise and produce a statement for the tax authorities. All of this even assumes you find a provider willing to setup an ARF for a non-resident.

All of which made me personally conclude an ARF is not a great idea for a non-resident who plans to stay non-resident. It just sounds too complicated at a time when I'd rather simplify my tax affairs going into retirement.

Unf. the main alternative (an annuity) is also not very desirable. And I doubt you can take out 100% in cash, as per another thread currently active on this forum.
 
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