ASPIRE APPRovEd REtIREmEnt Fund And APPRovEd minimum REtIREmEnt Fund CuStomER BRoChuRE

Transcription

1 Mercer ASPIRE Approved Retirement Fund and Approved minimum Retirement Fund Customer Brochure

2 What s in this brochure? 1 Your Mercer Aspire ARF Page 1 ARFs and AMRFs explained Page 2 ARF or AMRF: which option is available to them? Page 3 2 growing YOUR ARF Page 4 Help Me Do It: investment made easy Page 5 Comparing your Portfolio options Page 6 Leave Me To It: making your own investment choices Page 7 3 Important ARF information Page 8 The Mercer Aspire ARF and useful contact details Page 10 Mercer and Zurich: Combining our strengths to provide Your Mercer Aspire ARF Mercer is one of the world s leading providers of pension and investment services and has designed the Mercer Aspire ARF. Mercer s financial planners will provide you with advice where needed on the Mercer Aspire ARF. Mercer s investment consulting and investment management businesses design the asset allocation and select investment managers for the Mercer Aspire ARF. Zurich Life is one of Ireland s most successful life insurance companies. It has been providing pensions in Ireland for over 30 years. At Zurich Life, we re committed to the provision of excellent customer service and the streamlined administration of your Mercer Aspire ARF. You can access key information about your ARF, such as the value, via July 2014 edition

3 1 Your Mercer Aspire ARF Hello, my name is Brian. It s almost time for me to retire, and I m looking forward to a new chapter in my life. Up until now, my goal has been to build up the value of my pension savings. Now, I need to decide how best to use them, to give myself and my family the freedom and security to enjoy my retirement. There are three main options to consider: A retirement lump sum. A regular retirement income for life (an annuity ). Continued investment with an Approved Retirement Fund (ARF) and/or an Approved Minimum Retirement Fund (AMRF). Reading up on my options, talking to friends, colleagues and a financial expert, all helped me realise how I could use my pension savings to continue generating growth with an ARF. This brochure focuses on ARFs and AMRFs, and aims to give you the information you need to decide if it s the right option for you. While this brochure will give you a summary of ARFs and AMRFs, it does not constitute advice or a recommendation in any way. Of course, nothing replaces the value of sitting down and discussing your plans with a financial expert. To keep things simple, this brochure refers to both ARFs and AMRFs when using the term ARF, unless otherwise specified. Is investing in an ARF or AMRF the right option for you? If you are considering investing in an ARF or AMRF at retirement, feel free to contact the Mercer Financial Planning helpline on or Financial.Planning@mercer.com for advice on whether an ARF or AMRF is the best option for your personal financial circumstances. 1

4 ARFs and AMRFs Explained What is an ARF/AMRF? ARFs and AMRFs are Investment Options which enable you to continue investing after retirement. The aim of an ARF is to give you the flexibility to continue the investment of your pension savings when you retire, instead of using them to buy an income for life (known as an annuity). You can invest in an ARF for as long as you like. An ARF has the potential to grow in value. Your family can inherit the value of your ARF in the event of your death (though taxes may apply, depending on who inherits). However, an ARF does not offer the same certainty and security of an income for life that you get with an annuity. Without careful planning, it is possible to drain the value of your ARF before you die. There are some eligibility criteria which you can read about below. What are the eligibility criteria for investing in an ARF or an AMRF? You can invest in an ARF if: you are over age 75, or you have a guaranteed income for life (annuity) of 12,700 per annum, or you have spent at least 63,500 purchasing an annuity (or have spent a total of 63,500 on a combination of an AMRF and annuity purchase). If you do not meet these critieria you must first invest at least 63,500 in an AMRF and the balance can then be invested in an ARF. What are the common features of both ARFs and AMRFs? Withdrawals are currently liable to income tax, USC (Universal Social Charge) and, in some cases, PRSI (Pay Related Social Insurance). An ARF can be used to purchase an annuity at any time. Exit penalties may apply to large withdrawals or annuity purchase in the early years of the ARF. If the value of your ARF falls to zero, it ceases to exist and no further withdrawals are possible. An ARF can be inherited tax free by a spouse/ civil partner, or subject to tax by anyone else. What are the main differences between an ARF and an AMRF? ARF You can withdraw income from an ARF at any time, at any level you choose. Once you are over age 60 (for the full tax year), you must withdraw 5% of the value of an ARF every year. This figure rises to 6% if you hold ARFs and/or vested PRSAs (Personal Retirement Savings Account) with a total value in excess of 2 million. AMRF The original investment in an AMRF cannot be withdrawn as income until: you are over age 75, or you fulfil the government s guaranteed income condition, or you spend at least 63,500 purchasing an income for life (annuity). Growth on an AMRF above the level of the original investment can be drawn down at any time but there is no requirement to withdraw anything from an AMRF until age 75. Mercer Aspire Approved Retirement Fund Customer Brochure 2

5 ARF or AMRF: which Option is available to them? I m John, I m aged 65 and I ve just retired. I don t have any other source of income apart from my company pension. After taking my retirement lump sum from my pension I will have 58,000 left over. I m James. I m aged 65 and I ve just retired. I have sufficient money in the bank to provide for my needs and do not want to buy an annuity. I have 150,000 in pension savings, from which 37,500 can be taken as a retirement lump sum. I m Jane, I m 64, and I am retired with a guaranteed annuity income for life of 22,000 each year. I also have pension savings worth 200,000, from which I can take a lump sum of 50,000. John does not meet the criteria to invest in an ARF, as he is under 75 and has no guaranteed retirement income. He could choose to invest his 58,000 in an AMRF. James will have 112,500 left after taking his retirement lump sum. He will need to place 63,500 of this in an AMRF before placing the balance of 49,000 in an ARF. As Jane has a guaranteed income for life in excess of 12,700 each year in place, she is free to take her lump sum, then place the full 150,000 balance of her pension savings in an ARF. Is investing in an ARF or AMRF the right option for you? All of these individuals should carefully consider whether an ARF or AMRF is a better option for them than using their pension savings to buy an income in retirement. If you are considering investing in an ARF or AMRF at retirement, feel free to contact the Mercer Financial Planning helpline on or Financial.Planning@mercer.com for advice on whether an ARF or AMRF is the best option for your personal financial circumstances. Mercer Aspire Approved Retirement Fund Customer Brochure 3

6 2 GROWing YOUR ARF If you decide to invest in an ARF, you have two investment approaches to choose from. Help Me Do It If you choose this approach: Your ARF will be invested in a way that reflects your tolerance of risk in relation to potential reward. You do not need to make ongoing time consuming or complicated investment decisions yourself. Mercer will handle ongoing choices between different investment managers and asset classes in a manner consistent with the risk tolerance you have chosen. To find out more, go to page five. Leave Me To It If you choose this approach: You will mix, match and choose from a broad range of Investment Options yourself. Mercer can advise you on your selection if you wish, but no changes will be made to your mix of Investment Options without your intervention. To find out more, go to page seven. Rest assured, Whichever option you choose Mercer will choose, monitor and (where necessary) replace specialist investment managers within all Aspire Investment Options. You can log in to your personal online ARF account to keep up-to-date with your Mercer Aspire ARF, monitor its value and alter your Investment Options. If you have any questions about your Mercer Aspire ARF, you have access to the Mercer Financial Planning Helpline. Just call Your Mercer Aspire ARF will be administered by Zurich Life. Need more? You can find out more details about the Investment Options available in the Aspire ARF & AMRF Investment Options Guide. Mercer Aspire Approved Retirement Fund Customer Brochure 4

7 Help Me Do It Investment made easy The Mercer Aspire ARF makes it easy if you would like to make an investment decision based on your personal goals but you re not quite sure where to start. To help you decide on what to invest in, a Mercer adviser can conduct a factfind with you to ascertain your circumstances, and then recommend a Portfolio that most closely suits your aims and risk tolerance. Once you make your decision, Mercer will then take care of the rest, making sure - as far as possible - that your ARF is well diversified and matches the level of risk you are comfortable with. Help Me Do It : How it works 1 Choose 2 mercer 3 You the Portfolio for you You may not wish to devote the time needed to monitor and rebalance a mix of Funds continually, or you may feel that you are not expert enough to do this. The Help Me Do It approach enables you to select the Portfolio that best suits your aims, circumstances and risk tolerance, after which Mercer will take care of the more difficult and time consuming investment decisions. will oversee your chosen Portfolio Your Portfolio will be invested in asset classes considered appropriate given Mercer s understanding of your risk tolerance. Mercer will aim to keep the level of risk taken by that Portfolio reasonably constant. Mercer will select the most suitable and cost effective investment managers available to manage the different elements of the Portfolios. Mercer will monitor these investment managers on an ongoing basis and replace them where we think it is sensible to do so. will receive regular updates on your portfolio It is important to review your ARF regularly. You will have online access to information about your ARF, including its value, and you will receive annual statements from Zurich Life. If your financial plans or your risk tolerance change, you can switch to a new Portfolio, or to any of the Funds described in the Leave Me To It section on page seven. Need more? If you need help deciding which Portfolio might be right for you, call the Mercer Financial Planning Helpline on Mercer Aspire Approved Retirement Fund Customer Brochure 5

8 Comparing your Portfolio options HIGH Potential returns ARF Cautious Portfolio ARF Progressive Portfolio ARF Adventurous Portfolio ARF Aggressive Portfolio LOW Alternative Portfolio Options Potential risks Most likely to be suitable for HIGH Aspire Protection Portfolio Aspire Defensive Portfolio People who want their money in a cash based investment that should not experience significant ups and downs in value (before withdrawals are taken into account) People who want to provide protection against changes in the cost of buying an income or life (annuity). These Investment Options are subject to change. To view the current range of Investment Options available, visit For full details on the Portfolio options available please consult the Aspire ARF & AMRF Investment Options Guide. The descriptions of the Portfolios detailed here represent Mercer s view and do not carry any investment guarantees. Before choosing an Investment Option, you may wish to talk to a financial advisor about whether it is suitable for you given your own tolerance to risk. Warnings Warning: The value of your investment may go down as well as up. Warning: If you invest in this product, you may lose some or all of the money you invest. Warning: This product may be affected by changes in currency exchange rates. Warning: The income you get from this investment may go down as well as up. Mercer Aspire Approved Retirement Fund Customer Brochure 6

9 Leave Me To It making your own investment choices You may feel comfortable selecting and monitoring your own mix of Investment Options. The Leave Me To It approach enables you to do this, and to receive the benefit of Mercer s selection, monitoring and where necessary replacement of investment managers in each Investment Option. Mercer can provide you with advice on your initial mix. If you adopt this approach, while Mercer will take care of manager selection, you will retain control over the mix of Funds and Portfolios used in your ARF. Market movements will cause the initial balance of Investment Options chosen to shift, so it is important that you monitor the progress of your ARF regularly. If you do not wish to monitor your chosen investments frequently the Help Me Do It approach may be more suitable for you. There is a broad range of Investment Options to choose from in the Mercer Aspire ARF, and more detail can be found in the Aspire ARF & AMRF Investment Options Guide. Mercer may periodically alter the options available when this is deemed appropriate. To see the full range of Investment Options available to your Mercer Aspire ARF, visit In the Mercer Aspire ARF you are free to mix and match any combination of the Funds available with the Portfolios described on page six. You can switch your choice of Portfolios and Funds as often as you wish - in general this is free, but there is a charge if you make more than four switches in a year (currently 20 per additional switch). 7

10 3 information Important ARF If you are considering investing in an ARF, this section contains useful questions and answers, and more detail about tax, charges and withdrawals that you should be aware of. If I decide to invest in an ARF, how can I keep track of how it s performing? You can check the value of your ARF at any time by logging onto Zurich Life s secure website You will be sent PIN and password details shortly after your ARF has been set up. If you ever lose or forget your login details, you can aspire@zurich.com. This will happen at age 75 at the latest, but could happen earlier if you achieve the level of guaranteed pension income required by the legislation in place at that time. You can, at any time, use the total value of your ARF to purchase an annuity however, exit penalties may apply in the first six years. Can I make further contributions? Unfortunately, regulations prohibit you from making regular contributions to your ARF. However, you may top up your ARF by transferring savings from a pension plan that is due to mature as long as the ARF option is legally available for that pension. Also, if you have other ARFs or AMRFs, you can transfer them to the Mercer Aspire ARF to consolidate your investments. Can I withdraw money from my ARF? You can withdraw some, or all, of the value of your ARF at any time. Withdrawals will be subject to income tax, USC and (if you are under age 66) PRSI. Exit penalties may apply to withdrawals in the first six years, unless your withdrawals are taken in the form of a regular income. If you have an AMRF, you can only withdraw any growth achieved, not the original investment amount, until you can turn the AMRF into an ARF. Do I have to withdraw money from my ARF? Yes, once you are over age 60 (for the full tax year) regulations effectively require that each year you withdraw at least 5% of the value of your ARF (but not your AMRF, if you have one). This figure rises to 6% if you hold ARFs and/or vested PRSAs with a total value in excess of 2 million. No exit penalties apply to these withdrawals. What happens if I want to switch or transfer out of my ARF? Subject to certain controls and legal restrictions you may be able to transfer the value of your ARF into another ARF. You will also be able to use your ARF to purchase an annuity at any time. However, as early exit penalties will apply, you should try to avoid transferring out of your ARF in the first six years that you hold it. Mercer Aspire Approved Retirement Fund Customer Brochure 8

11 What happens to my ARF if I die? An advantage of an ARF/AMRF over an annuity is that in the event of your death, it can be passed on as an inheritance. The tax treatment depends on who is inheriting and the regulations in place at that time. At the date of publication the regulations are as follows: Inheritor Surviving spouse/civil partner Cash transferred in to an ARF in your spouse/civil partner s name TAX DUE No tax on transfer to a surviving spouse s ARF. All subsequent withdrawals by a spouse will be liable to income tax under PAYE, USC and, in some cases, PRSI. Spouse s ARF transfer is exempt for Inheritance Tax. Surviving spouse/civil partner Direct transfer of ARF capital The full amount is treated as the income of the deceased spouse in the year of death and taxed accordingly under PAYE, USC and, in some cases, PRSI. Transfer value is exempt from Inheritance Tax. Child Over 21 at date of parent s death, direct transfer of ARF capital Child Under 21 at date of parent s death, direct transfer of ARF capital Other Tax of 30% (as of 2014) on amount inherited, deducted at source. Transfer value is exempt from Inheritance Tax. No income tax liability. Transfer value is subject to Inheritance Tax. The full amount is treated as income of the deceased in year of death and taxed accordingly. Any balance is subject to Inheritance Tax. Mercer Aspire Approved Retirement Fund Customer Brochure 9

12 the MErcer Aspire ARF and Useful contact details If you wish to apply for the Mercer Aspire ARF simply complete a Mercer Aspire ARF Application Form and return it to Zurich Life. Need to contact someone about the Mercer Aspire ARF? What do you want to do Update your contact details Reset your login details Check your policy value Check your current investment choices Check out information on your Investment Options including the latest Fund Descriptions or the Aspire ARF & AMRF Investment Options Guide Change your Investment Options Set up regular withdrawals, or take a once off withdrawal Transfer a pension into the Mercer Aspire ARF Take your benefits at retirement How do you do it Contact Mercer on , or Financial.Planning@mercer.com Contact Zurich Life at aspire@zurich.com Log on at Log on at Log on at Log on at Contact Zurich Life at aspire@zurich.com Contact Mercer on , or Financial.Planning@mercer.com Contact Mercer on , or Financial.Planning@mercer.com Need more? If you have questions about making your investment decisions, or want advice on how you can make the most of your ARF you may wish to call the Mercer Financial Planning helpline on or Financial.Planning@mercer.com. Mercer Aspire Approved Retirement Fund Customer Brochure 10

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16 Mercer and Zurich: Combining our strengths to provide Your Mercer Aspire ARF Mercer is one of the world s leading providers of pension and investment services and has designed the Mercer Aspire ARF. Mercer s financial planners will provide you with advice where needed on the Mercer Aspire ARF. Mercer s investment consulting and investment management businesses design the asset allocation and appoint investment managers for the Mercer Aspire ARF. Zurich Life is one of Ireland s most successful life insurance companies. It has been providing pensions in Ireland for over 30 years. At Zurich Life, we re committed to the provision of excellent customer service and the streamlined administration of your Mercer Aspire ARF. You can access key information about your ARF, such as the value, via July 2014 edition Intended for distribution in the Republic of Ireland. The information contained herein is based on Zurich Life s understanding of current Revenue practice as at the date of issue and may change in the future Mercer LLC. All rights reserved. Mercer Charlotte House, Charlemont Street, Dublin 2, Ireland. Telephone: Website: Mercer (Ireland) Ltd., Mercer Financial Services Ltd., and Mercer Global Investments Europe Ltd., all trading as Mercer, are regulated by the Central Bank of Ireland. Zurich Life Assurance plc Zurich House, Frascati Road, Blackrock, Co. Dublin, Ireland. Telephone: Fax: Website: Zurich Life Assurance plc is regulated by the Central Bank of Ireland a - AC - n13_156 - Aspire - Zurich Administrated - Booklet - Approved Retirement Fund