What are the main differences between an ARF and an annuity?

Eoin Cullen - Reade Pensions Financial Services

Eoin Cullen BBS Msc QFA Grad. Dip CFP ®

The key differences between an ARF and an annuity are flexibility and risk.

An annuity converts the money in your retirement fund into a guaranteed taxable income payable for your lifetime, fixed on the date you buy the annuity. However, on death, there may be little or no return for your dependants.


An ARF allows you to preserve, manage and control your retirement fund. You can invest your money into suitable assets and decide how much taxable income you want to withdraw each year, subject to the minimum withdrawal once you are aged 61 or over. It does not provide any guaranteed income but any balance in your ARF on death is payable to your dependants.

Annuity Approved Retirement Fund (ARF)
An annuity offers an income guaranteed payable for life
Your fund could run out during your lifetime, leaving you with no regular income. Your ARF does not provide a guaranteed income for life unless it invests in an annuity
There is no flexibility and no ability to make changes to your annual income, once you purchase the annuity
You can decide how much money you withdraw each year. (You must normally withdraw a minimum amount
You are locked into a set annuity rate fixed on the date of investment, with no potential for growth.
Your fund can be invested into suitable assets, which means you can benefit from potential growth in that investment. However, it is also possible that the value of your fund could drop, depending on your investment options.
Income stops when you and your partner (if you have a joint life annuity) die; there is likely to be little or no payment to your dependants on death.
You can leave any remaining funds (subject to tax) to your dependants when you die.

Reade Pension and Financial Services have been advising clients on designing and implementing pension schemes for their employees for more than 25 years. We would welcome the opportunity to meet with you to identify areas of financial planning that you and your employees may benefit from.


Please contact your Reade Pensions representative to set up an appointment in due course.

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About Eoin

BBS Msc QFA Grad. Dip CFP ®

Eoin has been providing advice to private clients and companies for the past 15 years. Eoin has held senior advisory roles in Aviva & Willis Towers Watson.

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