Approved Retirement Funds or ARFs are funds managed by a qualifying fund manager into which an individual may invest the proceeds of their pension fund when they retire. The income and gains of such funds are exempt from tax within the fund. Any amounts withdrawn from an ARF are referred to as a distribution. A distribution is treated as income from an employment. It is subject to income tax and the fund manager must operate the PAYE system on it.
Under social welfare legislation any payments received by way of pension are not regarded as reckonable emoluments for the purposes of self-employed pay related social insurance (PRSI). However, unlike annuity products, ARFs are not pensions but are treated as assets. As such distributions from ARFs for people less that 66 years of age fall within the charge to Class S self-employed PRSI, or if the recipient of the distribution is a modified class contributor, Class K. Distributions and imputed distributions, after age 66 (current State Pension age), are not liable to Class S PRSI deduction. They are recorded under PRSI Class M for which there is a nil liability.
As the Deputy will be aware PRSI Class S contributors are covered for the State Pension (Contributory), Widow's, Widower's or Surviving Civil Partner's Pension (Contributory), Guardian’s Payment (Contributory), Maternity & Adoptive Benefits, Paternity Benefit (since September 2016), Treatment Benefits (since March 2017) and Invalidity Pension (since December 2017). This Department is in the process of developing a new Jobseeker’s Benefit for the Self-Employed scheme which will be introduced in November 2019.
I trust this clarifies the matter for the Deputy.