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Irish Pensions Magazine Autumn 2016
14
Advertorial
Expert Opinion
Buy Out Bonds & The ARF Option
2
2nd June 2016 was a very important day for
deferred members of defined benefit schemes and
individuals who had already moved those benefits to
Buy Out Bonds. The Minister for Finance confirmed
that he had arranged for individuals who have a Buy
Out Bond that originated in a defined benefit pension
scheme to be allowed to use their Buy Out Bonds to
access the ARF option.
Impact of the change:
• Those who have already taken a transfer value
from a DB scheme to a BOB now have both the
traditional benefit option and the ARF option on
accessing a BOB
• Deferred members who decide or are forced
(through scheme wind-up) to take a transfer value
from a DB scheme can access the ARF option by a
transfer to a BOB as well as retaining the traditional
benefit option
Is BOB now the transfer product of choice?
All deferred members of DB schemes taking a transfer
value have the option to transfer to a BOB but some
may also have the option to transfer to a PRSA or to a
new DC scheme of which they are a member.
However, a transfer to a BOB now looks like the most
flexible option for most clients with deferred pensions
in DB schemes who have decided to take a transfer
because:
• No Certificate of Benefit Comparison will be
required for the transfer as applies to PRSAs
where the transfer value is greater than €10,000
• The BOB will provide both the ARF and traditional
access option
• The BOB will provide earlier (from 50 onwards)
access to benefits even if working in a new
employment/self-employed
Opportunity
While the extension of the ARF option to BOBs funded
by a transfer value from a DB scheme is welcome, the
decision to voluntarily take a transfer value from a DB
scheme in lieu of retaining a deferred pension in the
scheme should not be made solely on the basis of an
ability to get the ARF option. There are many other
“value for money” and risk issues to be considered
in making such a decision. The traditional benefit
option may still be the best options for some clients,
but at least all BOB clients will now have the choice of
ARF and traditional benefit options and that is a very
important change.
Investment choices
In recent years there have been some really significant
by Carmel Devine