The pre-Budget papers had highlighted that any decisions on pensions would be in future budgets, in view of the Pensions Roadmap and various consultations and reviews currently taking place on pensions.
There were no major announcements in relation to pensions the budget other than the €5 weekly increase in the highest rate of State Pension. Also the 100% Christmas bonus has been restored for 2018
The maximum State Pension (Contributory) from March 2019 will be €248.30 per week which will be over the current €12,700 pa specified income limit in relation to the €63,500 AMRF requirement.
The Christmas Bonus to the State Pension (100% of weekly amount payable in early December 2018) also counts towards the €12,700 specified income limit when received, as confirmed by Revenue in June 2018.
The combination of the increased State Pension from March 2019 and the extra week’s State Pension Christmas bonus in December 2018 counting towards the €12,700 specified income limit means that:
- Those who currently hold an AMRF and are in receipt of the State Pension (Contributory) at the maximum rate, will have their AMRF automatically turned into an ARF in early December 2018 with no policy change when they receive the extra week’s Christmas bonus on their State Pension, as their total State Pension annualised income will then be considered over €12,700. Clients will need to provide evidence of receipt of the State Pension.
- Those who currently hold an AMRF and are in receipt of the State Pension at less than the maximum rate, may have their AMRF automatically turned into an ARF in March 2019 or later in December 2019, depending on the level of their State Pension.
- New DC retirees under the State Pension Age and not in receipt of other pension income of at least €12,700 pa at that time will continue to be required to invest €63,500 in an AMRF or annuity (unless they have previously invested €63,500 in an AMRF or annuity). However, when they reach their State Pension Age and start to receive the State Pension Contributory, their AMRF may turn into an ARF at that time, depending on the level of State Pension they become entitled to.
So, for many, the AMRF will no longer be required and for others the AMRF holding period will be reduced from a maximum of 75 to their State Pension Age.
The specified income limit of €12,700 could yet be increased in the Finance Bill 2018 (to be published on 18th October 2018) so we will keep you posted on any relevant updates next week.