pensioners

Minister for Finance Improves Options for Pensioners

The Minister for Finance has arranged for individuals who have a Buy-Out Bond that originated in a Defined Benefit pension scheme to be allowed to use their Buy-Out Bonds to access the flexible option of an Approved Retirement Fund or ARF option.

  • At present, the ARF option is available in respect of the benefits payable from Defined Contribution pension schemes and personal pension plan arrangements, but is not, generally, available to the main benefits payable from Defined Benefit pension schemes. The only option currently available to an individual with a Buy-out Bond funded from a Defined Benefit scheme is to purchase a pension annuity with the funds in the Bond after taking the permissible tax-free lump sum.
  • Access to the ARF option for Buy-out bonds was generally dependent on whether the pension scheme from which the transfer value to the Bond originated was a Defined Benefit or a Defined Contribution scheme, with the option not available in the case of Defined Benefit transfers.
  • With this important policy change, and with effect from today, access to the ARF option will be available in respect of all Buy-out Bonds regardless of whether the transfer to the Bond came from a Defined Contribution or a Defined Benefit arrangement and regardless of when the transfer took place to the Buy-Out Bond.


The Minister for Finance, Michael Noonan, T.D. said:

“This change will be of particular benefit to those individuals with Buy-Out Bonds whose Defined Benefit scheme may have been wound up and who had no choice but to accept a transfer to a Bond. I have asked the Revenue Commissioners to make any necessary administrative changes to give effect to this improvement which offers greater choice to holders of Buy-Out Bonds”.

Approved Retirement Funds are investment vehicles into which the proceeds of the pension savings of the self-employed, business owners and any individual with Defined Contribution pension arrangements (including Additional Voluntary Contributions or AVCs) may be invested at retirement, subject to conditions. The Approved Retirement Fund option is an alternative to annuity purchase and essentially gives control over post-retirement income to those individuals who, generally, have borne the investment risk on their funds in the pension growth phase.

Buy-out Bonds are specialised pension products into which the cash value of pension rights in funded occupational pension schemes may be transferred in certain circumstances, including where such schemes are wound-up.

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