Table of Contents

Key Considerations

How to Withdraw your Pension

How Much to Withdraw

Managing Taxes

Tax-efficient Estate Planning

Next Steps to Take

Most pension advice is aimed at people in the midst of their careers, and there’s an assumption that once you retire, things just take care of themselves.

But your pension journey doesn’t end with retirement – there are still some important things to consider after you clock out for the final time, including:

  • Withdrawing your pension

  • Taxes

  • Inheritance planning

However, you’ll be pleased to know that the hard work is done. Now it’s all about simple financial planning to ensure you and your family make the most out of your pension savings.

This guide provides tips and advice for retirees, beginning with 3 key considerations for pension management during retirement.

Key Considerations for Retirees

Most people transfer their savings to an ARF (Approved Retirement Fund) after taking a tax-free lump sum upon retiring.

There’s no upper limit to how much you can withdraw each year, but remember that your pension must last the rest of your life.

ARFs are subject to minimum withdrawals – 4% of the value of your fund from the age of 61, increasing to 5% from 71. Those with extremely large funds have higher minimum limits.

Carefully planning your withdrawals and estimating how much you’ll need in the future could prevent you from running out of funds.

Pension withdrawals are taxed – which means that you should manage your withdrawals carefully to avoid paying more tax than you need to.

ARF withdrawals are taxed the same income in Ireland, meaning you may need to pay income tax, PRSI and USC, depending on your personal situation.

There are various thresholds and tax exemptions to take into consideration, so discussing your own tax situation with an expert will help you make the best decisions for your future.

Estate planning, and the taxation of inheritances, should be one of your primary considerations as you enter retirement.

When you die, your private pension can be inherited by your family. It can be transferred to your spouse’s ARF tax-free, or your children (over 21) can inherit the fund subject to a flat 30% tax. Children under 21 do not pay tax on pension inheritances. 

Understanding taxes and making sure that you pass on your savings tax efficiently is crucial in retirement. Again, speaking to a financial advisor to assess your options will put you at ease.

How to Withdraw your Pension

Most people take a tax-free lump sum of 25% of the value of their pension when they retire, transferring the rest of their savings to an ARF.

With an ARF, many pension providers allow you to make withdrawals every month, every 3 months, every 6 months or every year.

So how do you actually withdraw your money? 

You simply contact your pension provider and tell them how much you want, and when you want it. These funds are then transferred to your bank account after taxes are deducted.

Before you do this, you’ll need to decide how much you want to withdraw by taking taxes and inheritance planning into consideration.

Note: Some people decide to purchase an annuity instead, guaranteeing a set income for life, which eliminates the need for pension management.

How much should you withdraw?

After taking your lump sum, your remaining pension pot must last you for the rest of your life. As your fund is likely to have minimal growth, you must plan carefully to avoid running out of money before.

How much you should withdraw will depend on your finances, the value of your pension, whether you get the State Pension, your family circumstances, and your lifestyle.

Let’s look at how your pension would look with different withdrawal percentages, starting with the minimum withdrawal of 4% per year.

Withdrawing 4% from 66 and 5% from 71

Starting Pension Pot at 65 Growth Amount Withdrawn at 65 Remaining Pension at 75  Remaining Pension at 85
€100,000 2% €4,000 €77,718 €56,726
€150,000 2% €6,000 €116,578 €85,089
€200,000 2% €8,000 €155,437 €113,452
€250,000 2% €10,000 €194,296 €141,815
€500,000 2% €20,000 €388,592 €283,630

Withdrawing 8% from 65 and 6% from 71

Pension Pot at 65 Growth Amount Withdrawn at 65 Remaining Pension at 75 Remaining Pension at 85
€100,000 2% €8,000 €55,331 €36,329
€150,000 2% €12,000 €82,996 €54,493
€200,000 2% 16,000 €110,662 €72,657
€250,000 2% €20,000 €138,327 €90,821
€500,000 2% €40,000 €276,655 €181,643

Withdrawing 10% from 65 and 6% from 71

Pension Pot at 65 Growth Amount Withdrawn at 65 Remaining Pension at 75  Remaining Pension at 85
€100,000 2% €10,000 €45,970 €27,121
€150,000 2% €15,000 €68,955 €40,681
€200,000 2% €20,000 €91,940 €54,241
€250,000 2% €25,000 €114,925 €67,802
€500,000 2% €50,000 €229,849 €135,604

Your savings are invested in just one fund (Zurich Prisma 2) Growth is 2%, which is this fund’s 5-year annualised performance (August 2025). We apply growth after withdrawals. Values are rounded to the nearest euro.

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If your pension is worth €300,000, you could decide to withdraw the minimum of €12,000 per year (4%). This leaves more money invested, allowing it to grow tax-free.

Without any growth, your pension would only last 14 years in this scenario. If you’re only 65, this would mean running out of funds by 79 – which you don’t want to happen.

However your savings are likely to grow each year, especially if you have balanced your savings across portfolios with varying degrees of risk.

Be mindful that your savings are not infinite. Ask yourself whether you want your savings to last, or if you want to enjoy them while you’re still relatively young. 

Two other factors come into play here: taxes and inheritance.

Managing Taxes on Pensions in Ireland

Taxes on pensions in Ireland can vary depending on your age and the type of pension(s) you have.

It can be a minefield – so here are some of the key points for you to bear in mind.

Income Tax for Pensioners

  • Income tax can be charged on pension income.

  • Income under €18,000 is exempt from income tax. The State Pension is currently €15,043.60.

  • For married couples and those in a civil partnership, neither partner pays income tax once one partner turns 65 years of age provided the couple’s total income is less than €36,000.

  • If your income is over the exemption limit but less than twice it, you may qualify for marginal relief. This taxes only the amount over the limit at 40% without tax credits, but only if it’s more favourable than the standard calculation.

Planning your pension income with a financial advisor is the best way to make sure that you’re staying within the necessary bands for tax efficient withdrawals.

Universal Social Charge (USC)

  • Your income is exempt from USC if it is less than €13,000.

  • Reduced rates of USC apply once you turn 70 if your income is less than or equal to €60,000. The reduced rates are 0.5% on the first €12,012 and
    2% on the balance

USC Standard Rates

2025 Threshold USC Rate
First €12,012 0.5%
Next €15,370 2%
Next €42,662 3%
Balance 8%

Pay Related Social Insurance (PRSI)

You will continue to be liable to Pay-Related Social Insurance (PRSI) until you are either in receipt of the State Pension (Contributory) or 70 years of age, whichever comes earlier.

Occupational pension holders do not pay PRSI.

Using Your Pension for Tax-efficient Estate Planning

Unlike with annuities, the remaining funds in your ARF can be passed on to your spouse, your children, or another beneficiary.

Be aware that taxes vary depending on your relationship to the beneficiary, and plan accordingly.

Here are the main points to consider when you are planning your will:

  • Your spouse can receive the ARF into their own ARF without income tax or Capital Acquisitions Tax (CAT).They will pay income tax on any withdrawals from the ARF.

  • Children under 21 don’t pay tax on pension inheritance. They may have to pay CAT depending on the amount inherited.

  • Children over 21, tax is charged at a 30% flat rate on pension inheritances.

  • Other beneficiaries (not your spouse or children) pay both income tax and CAT.

These considerations come into play especially for those with a large estate. The 30% flat rate on pension inheritance is 3% lower than the CAT other inherited assets.

This is an efficient way to pass on large inheritances, and pension inheritance does not affect your CAT threshold. Other future tax-free inheritances are therefore unaffected.

The Next Steps

It’s time to enjoy the benefits of your long working career – and simple pension management is all about making the most of your hard-earned savings.

Tax and inheritance rules can be confusing as they can vary widely depending on your specific personal situation.

Speaking to a financial advisor about your annual withdrawals, tax burden and inheritance planning can give you peace of mind that you are managing your pension savings efficiently. 

All that’s left to do then is relax and enjoy retirement.