Bernard Durkan (Kildare North, Fine Gael)
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80. To ask the Minister for Finance how a person (details supplied) can best access savings accrued under the approved minimum retirement fund scheme; and if he will make a statement on the matter. [12455/16]

Michael Noonan (Limerick City, Fine Gael)
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Before Finance Act 1999 people with defined contribution pension savings had no option but to buy a pension income (called an annuity) with their savings after taking the allowable tax-free retirement lump sum. Changes since then have given people more choices for what to do with their pension savings. This is called the flexible options at retirement regime. These choices include taking a cash payment, subject to income tax, investing in an approved retirement fund (ARF) or investing in an approved minimum retirement fund (AMRF).

Until he or she is 75, a person can only take the whole amount of their savings as cash or put it in an ARF if he or she has a guaranteed pension income of €12,700 or more. If these conditions are not met then he or she can buy an annuity or put a certain amount of the funds, called the "set aside" amount into an AMRF. The maximum "set-aside" is €63,500 or the remaining value of the pension funds, after taking the tax-free retirement lump sum, if less than €63,500. These requirements have been in place since the introduction of the flexible options at retirement regime and are therefore of long standing.

The funds in an AMRF can be used at any time, in full or in part, to buy an annuity. This includes the option to buy an annuity which is large enough to give the owner a guaranteed income of €12,700. If the owner does this he or she will then have access to the rest of the funds, as their AMRF then converts into and ARF with discretionary access to the funds, subject to tax at their marginal rate.

The purpose of the AMRF is to ensure that a person without the minimum guaranteed pension income for life has a pension "safety net" to provide for the latter years of his or her retirement. However, every year to age 75, the owner of an AMRF can access 4% of the funds in the AMRF.

If an individual meets the requirements to be able to access the full amount of the funds in an AMRF and chooses to do so then it is taxable in the hands of the recipient as income for the tax year in which it is paid.