If you’re retiring in Ireland with around €1 million in pension savings, one of the biggest questions you’ll face is whether to take income from an ARF (Approved Retirement Fund) or to buy an annuity.

In this episode, we break down both options in plain English — what they mean, how they work under Irish tax rules, and which might suit your lifestyle and risk appetite.

Key Points:

What’s an ARF?

A flexible post-retirement investment account where you stay invested and draw income as needed — but you take on the investment risk.

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What’s an Annuity?

A guaranteed income for life, purchased from an insurer. No control or inheritance, but total certainty on your monthly income.

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Typical Income from a €1m Pension

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Taxation

ARF and annuity income are both taxed like salary — Income Tax, USC, and PRSI (if under 66).

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Pros and Cons

ARFAnnuityFlexible, inheritable, growth potentialFixed income, no investment riskMarket risk, ongoing managementNo capital access, inflation risk

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Blended Approach

Many retirees use both — annuity for essential bills, ARF for flexibility and growth.

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On Death:

- ARF can pass to spouse or children (taxed).

- Annuity stops unless spouse/guarantee is added.

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This decision isn’t about chasing the highest return — it’s about matching your income source to your comfort level.

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I hope it helps.