Personal pensions


Personal pensions or private pensions are pensions that are organised individually by self-employed people or employed people who do not have an occupational pension scheme. 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.

Retirement Annuity Contract (RAC) is the formal name for what is commonly called a personal pension and is a type of insurance contract.

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 PRSAs here.

You do not have to remain in the same pension fund. You may transfer funds accumulated with one insurer to another fund with another insurer. There may be costs involved in doing this.

Options on retirement

On retirement, you may have the option of transferring all or some of your retirement fund into an annuity or other approved scheme that will provide a regular pension income.

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

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

The Pensions Authority website has more information on your options at retirement.


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.

If you are under 75 and want to buy an ARF, you must have a guaranteed annual income of at least €12,700. To be considered guaranteed, the income must generally come from an existing pension or annuity. If you do not meet this income threshold, you must purchase an Approved Minimum Retirement Fund (AMRF).

Approved Minimum Retirement Funds

An AMRF is a fund for people under 75 with a retirement income of less than €12,700 a year. You can transfer a maximum of €63,500 from your existing pension fund into the AMRF. You can only withdraw a maximum of 4% of the fund each year. An AMRF operates in a similar manner to an ARF, except you cannot withdraw any of your original capital until you reach 75 (you can only withdraw investment growth). Any remaining money left in the pension fund above €63,500 can be transferred into an ARF.

AMRFs automatically become ARFs when you:

  • Reach 75, or
  • Have a guaranteed annual income of €12,700 or over, or
  • Die

What happens to your pension fund after your death

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 regarded as your income in the year of death.

The tax treatment of ARFs when you die depends on who inherits the ARF and in what manner.

Transfers to your spouse

If the ARF transfers into the name of the holder’s spouse, then no income tax or Capital Acquisitions Tax (CAT) is payable. However, the 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 (not being your surviving spouse or child) both income tax at the marginal rate and CAT is payable.

You can read more information on pension benefits payable on death.

Page edited: 1 November 2021