Remember your ARF is likely to play a very significant role in the quality of your retirement and it’s important to take the time to address some key areas. Getting decisions wrong now can have permanent financial consequences.

Successful ARF planning revolves around 5 key considerations:

• Income Sustainability – What level of income drawdown can your ARF sustain?
• Tax – Do you understand the income tax and inheritance tax implications of yourARF?
• Inheritance – What are the possible inheritance opportunities you should be aware of for your ARF?
• Investment Strategy – Are you comfortable with the risk profile of the income generating funds you have in your ARF?
• Fees – Do the fees you pay in your ARF represent value for money?

This is a function of what are your living / leisure expenses allied to any other income sources you have such as state pension, rental income etc. The income needed to be drawdown from your ARF can then be established. We feel it is imperative to understand the role of the ARF in the broader context of your retirement plans and income needs. We use a powerful cashflow forecasting tool to plan our client’s income needs for the rest of their lives. By taking the time to do this, we ensure the role of the ARF is understood.

You can take as much as you like but you should only take what you need. Remember income from an ARF is assessable to income tax so there is no point in taking income that you don’t need only to have it taxed. On the other hand, we see many examples of those who are almost afraid to take income for fear they are taking too much.

You are free to establish your ARF with your existing Pension Provider but you are also free to look at ARF options with all other ARF providers on the market. Futhermore if you have an existing ARF but are unhappy with the performance of it then you are also free to transfer your ARF to a new ARF provider.

The choice of ARF provider can vary depending on many factors but we generally use the following criteria when deciding the most appropriate ARF provider with which to place our clients ARFs:

• Financial Strength of the ARF Provider
• Investment track record
• Access to viewing your account online / the ability to check your account balance online
• Competitive Fess / Charges
• Large range of conservative risk funds to choose from.

We deal primarily with the following ARF providers for our clients:

Aviva Life and Pensions

Friends First

Zurich

Irish Life

Standard Life

BCP

Wealth Options

New Ireland

ITC

All investment funds available to ARF investors work from a standardized industry wide risk rating scale, called the ESMA scale. This allows investors to understand the risk profile of their ARF investment.

The ESMA scale works on a 1 to 7 basis. A risk rated 1 fund is the lowest possible risk rating and would typically be a fund which comprised almost entirely of cash. A risk rated 7 fund however is the highest possible risk rating and would be comprised almost entirely of equities (stock & shares).

As a rule, we advise clients to consider taking a conservative investment approach with their ARF funds. ARF Ireland have developed several investment risk profiles at the more cautious end of the investment risk spectrum with all of the insurance / ARF providers we deal with.

We have also developed a risk profiling tool for our clients so that we can establish what risk profile suits them best.

Understanding your fees is important.

These are your Insurance or Pension Company / ARF Provider and your Financial Advisor

There is always a recurring annual fee levied by the insurance / ARF provider for the day to day management of the ARF in the fund(s) chosen. Annual fees will vary from 0.5% to as high as 1.5% and are taken directly from the ARF.

ARF Ireland negotiate with the various providers on the market to secure as low as possible an annual fee for you.

Unlike many firms, we do not charge set up fees for getting your ARF up and running. Some firms may charge anywhere from 1% to 5% of your starting ARF fund value as a set up fee. We do not.

We charge our clients an annual fee of between 0.25% and 0.5% of their ARF fund value depending on a number of factors, again levied directly from the ARF. We do not charge entry / allocation fees as outlined above as we believe we should be paid based on the financial planning advice we give to you and performance of your ARF over your lifetime. The fee is agreed with each client in advance of the ARF being set up.

As a result we commit to meeting with our clients a minimum of every 12 months. We feel this level of interaction is important  as there are many issues and ongoing decisions that need to be made with your ARF investment. For example, Health, Changes to Family Circumstances, Tax Law Changes, Investment Market Volatility and much more all affect your ARF. At these yearly meetings we review the progress of your ARF and continue to ensure the primary ARF considerations are still being met:

• Income Sustainability – what level of income drawdown can my ARF sustain?
• Tax – Do I understand the income tax and inheritance tax implications of my ARF?
• Inheritance – what are the possible inheritance opportunities I should be aware of for my ARF?
• Investment Risk – Am I comfortable with the risk profile of the income generating funds I have in my ARF?
• Fees– Do the fees I am paying in my ARF represent value for money?