The Finance Act 2021 was signed into law on 22 December 2021 and included some important updates for clients who have an AMRF and / or a Vested PRSA. As these changes have a far-reaching impact, we wanted to share the key points of the Act with our clients and highlight the actions that Pension Providers will be taking over the coming weeks.
- Removal of the Specified Pension Income requirement
With effect from 22 December, the requirement to have Specified Pension Income of €12,700 per annum or investing €63,500 in an AMRF to be able to invest in an ARF or take taxable cash has been removed.
This means that clients are no longer required to set up an AMRF, leaving the options to take a 25% Tax-Free Retirement Lump Sum, invest in an ARF or take taxable cash in place.
- Conversion of existing AMRFs
From 1st January all AMRFs are required to convert to ARFs and for clients who are impacted by this change will see their existing AMRF automatically converted to an ARF.
- AMRF clients with existing ARFs
Where a client has an existing ARF policy and is taking regular income, the new ARF policy should replicate the frequency of the existing ARF income and where applicable, the payment will be set up for the minimum amount liable under imputed distribution rules.
- Vested PRSAs
The requirement to set aside €63,500 of a vested PRSA policy has also been removed and Vested PRSA clients will now have access to the full value of their vested PRSA policy and will be subject to imputed distribution rules where applicable.
- Client Communications
Pension Providers should start issuing letters to all AMRF and Vested PRSA clients before the end of Q1 2022 to outline the changes that have come into effect, provide details on how imputed distribution payments will be paid and request bank account details where applicable.
Other Important Updates
- Changes to the rules for transfers from Occupational Pension Schemes (OPS) to Personal Retirement Savings Accounts (PRSA).
With effect from 22 December the requirement to have less than15 years scheme service on transferring from an OPS to a PRSA has been removed.
- Death In Service – Changes to options for dependants
With effect from 22 December the requirement under an OPS to purchase a Dependant’s Annuity following the payment of the Revenue Maximum Lump Sum on Death in Service has been extended to allow dependants to set-up an ARF as an alternative.
Source: New Ireland Assurance
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