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Pensioners can unlock cash early, Revenue announces

Thousands of pensioners will get an early opportunity to unlock money in retirement funds they have been unable to access up to now.

Car dealers and travel agents are expected to be the big winners after rules restricting access to a certain type of pension fund were loosened.

The move comes after Revenue agreed that thousands of pensioners will be able to unlock money in what are known as approved minimum retirement funds (AMRFs).

Previously pensioners who had an AMRF could not access their funds before they were 75, unless they had a pension or annuity of €12,700 a year.

This created problems for those who were on the full State pension but with no other income.

With the full State pension at €12,651 per annum, many pensioners were finding themselves with funds locked in an account just because they were €49 a year short of a pension income.

It is thought that around 25,000 people have AMRFs.

Actuary Tony Gilhawley of Technical Guidance said a new Revenue update now allows the State pension Christmas bonus to be taken into account against the €12,700 pension income needed to unlock funds.

He said AMRF holders currently on the maximum rate of State pension should be able to access their funds in full in December this year after they receive the Christmas bonus on their State pension.

Minister for State Jim Daly has claimed credit for the policy shift. He said the move will unlock hundreds of thousands of euro for pensioners.
“The previous situation represented a glaring anomaly in the system that was preventing healthy and fit pensioners that may want to access their funds to do some travel or buy a new car,” the minister said.

Mr Gilhawley said this meant car dealers and travel agents would likely be the big winners as some pensioners with unlocked AMRFs may splash out in December.

“I think Trailfinders and car dealers will be the main beneficiaries of the Revenue change,” he said.

The actuary said many pensioners would be able to use their AMRF funds to maximise their benefits in the coming years.

“Retirees who have little or no other income other than the State pension may be able to empty their AMRF completely tax free over a few years, using the income tax exemption relief,” he said.

He explained that people pay no income tax over age 65 if their total income is less than €36,000 (married couple) or €18,000 (single person).

Mr Gilhawley gave an example of a married couple with one of them receiving the maximum State pension and the other getting the maximum qualified adult pension.

This couple may be able to withdraw about €11,000 tax free from their AMRF in December this year, using the income tax exemption relief for the over 65s.

He said that over a period of years, the retiree may be able to completely withdraw their current AMRF tax free. They could withdraw it faster but might pay some tax on the withdrawals.

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