Personal pensions


If you are self-employed or you have an employer who does not have an occupational pension scheme, you may need to arrange your own pension, called a personal pension or private pension. Personal pensions are managed by a life assurance or investment company.

Most personal pensions policies are insurance policies. Unlike most insurance policies, you can get tax relief on pension contributions.

Getting a personal pension

Retirement Annuity Contract (RAC) is the formal name for what is commonly called a personal pension plan and is a type of insurance contract. Different plans are available and you can buy directly from providers but an independent financial adviser can help you find the best option. If you are comparing plans, check what fees will be charged and when. Also check how your contributions will be invested and what risk there is for that type of investment.

A Personal Retirement Savings Account (PRSA) is another type of personal pension. It is like an investment account that you use to save for your retirement. Read more about getting a PRSA and the different types available.

When you have a personal pension, you do not have to always remain in the same pension fund. You can transfer funds accumulated with one insurer to another fund with another insurer. There may be costs involved in doing this.

Options on retirement

When you retire, you can take a tax-free lump sum. You can also transfer all or some of your retirement fund into an annuity or other approved scheme that will give you a regular pension income.

For personal pension plans, the options available on retirement include:

  • Purchasing an annuity
  • Investing in an Approved Retirement Fund (ARF)


With an annuity, you buy a regular pension income with all or part of your retirement fund. In return for you transferring your retirement fund to a life assurance company, the company will pay you a secure regular income for the rest of your life. The amount of this regular income depends on a number of things, including:

  • The amount of your retirement fund
  • Your age and health
  • Whether you are male or female
  • Whether your pension will continue to paid to any dependants on your death
  • The annuity rate that the life assurance company offers at that time

Approved Retirement Funds

An Approved Retirement Fund (ARF) is a personal retirement fund where you can keep your pension fund invested as a lump sum after retirement. You can withdraw money from it regularly to give yourself an income. Any money left in the fund after your death can be left to your next of kin. Because an ARF invests in various assets (such as shares, property, bonds and cash), your original investment is not guaranteed. This means there is a risk that your fund could get significantly smaller over time.

Before 1 January 2022, if you had a guaranteed annual pension income of less than €12,700, you had to purchase an Approved Minimum Retirement Fund (AMRF) which had extra restrictions on withdrawing funds. Since 1 January 2022, this requirement no longer applies and any existing AMRF automatically becomes an ARF.

For more detailed information about ARFs, see further information from Revenue on Approved Retirement Funds (pdf).

What happens to your pension fund after yourdeath

If you die before retirement and have a personal pension, the accumulated funds form part of your estate and are distributed accordingly. Capital Acquisitions Tax (CAT) may apply.

Your annuity income is usually just for your own lifetime and generally does not go to your dependants when you die. However, there are some guaranteed annuity products that may pay out some benefit to your dependants

If you die after retirement and have invested in an ARF, the remaining funds form part of your estate but are treated as your income in the year of death.

The tax treatment of ARFs when you die depends on who inherits the ARF.

Transfers to your spouse

If the ARF transfers to your spouse, then no income tax or Capital Acquisitions Tax (CAT) is payable. However, your spouse will pay income tax on any withdrawals from the ARF.

Transfers to your children

If the ARF monies are inherited by your child, the taxation treatment depends on the child’s age at the time of your death. If they are aged:

  • Under 21, no income tax is payable, although CAT may be payable depending on the total amount inherited.
  • 21 or over, income tax at rate of 30% is chargeable. However, CAT is not payable.

Other transfers

If the ARF monies are inherited by any other person (who is not your surviving spouse or child) both income tax at the marginal rate and CAT is payable.

You can read more about pension benefits payable on death.

Page edited: 11 June 2024