ARFs are 25 years old – how have Zurich customers fared?

It’s been 25 years since Approved Retirement Funds (ARFs) were introduced, undoubtedly a significant event in the retirement landscape of the country. Launched way back in 1999, the ARF allows your clients to preserve, manage, and control their retirement savings – something that simply wasn’t available with the more traditional annuity.

The introduction of ARFs dramatically changed the retirement landscape, allowing Irish retirees to make informed decisions about their financial futures. Today, as our population ages, we are fortunate to have a dynamic and resilient retirement planning framework in Ireland – one that offers customers real choices. With the transition away from defined benefit schemes, more and more future retirees are going to need advice on retirement – the decision to purchase an annuity or invest in an ARF is not an easy one and needs the expert advice that can be provided by a Financial Broker.  Launched in 1999, ARFs were developed to meet the changing demands of the market, offering a range of investment options and tax efficiencies. They have the flexibility to invest in suitable assets and determine the amount of taxable income they wish to withdraw annually, subject to a minimum withdrawal requirement. While it doesn't offer the guaranteed income for life that an annuity does, an ARF provides significantly greater flexibility to align with their life plans and aspirations.

ARFs will play an even bigger role in the future

Like many developed countries, Ireland is facing significant population challenges. While we currently have one of the youngest populations in Europe, the number of people over aged 65 years set to increase significantly with the number of people in this age category set to reach over 1 million by 2030*.

Increased longevity and better medical care are transforming the definition of ‘old-age’ in Ireland. Of course this is good news but it is not without its challenges. Retirement is now seen as bringing a whole new lease of life, an opportunity to kick start new learnings and opportunities. The days of the ‘carriage clock’ retirement already seem outdated.

Changes in personal retirement expectations are matched by changes in retirement planning. Annuity rates have fallen over the last decades and for many retirees they are no longer the only option. The rise in popularity of ARFs as a more flexible retirement vehicle is obvious and they are now an integral part of the client retirement conversation. What is clear about retirement is that it is becoming one of the most important financial decisions a person will make and one that should not be made without proper advice. Choosing an annuity is a once in a lifetime decision. Choosing an ARF is the continuation of a life of investing - people should not make a decision on either route without first seeking financial advice.

Six reasons to choose Zurich for Approved Retirement Funds

1. Market leading investment performance: At Zurich, our Dublin based investment team have a strong track record in delivering long term consistent fund performance. For example, our popular Prisma 4 fund has delivered an average of 7.1% per annum over 10 years, compared to a market average of 5.6% per annum**.

2. Product features to enhance the retirement experience: When retiring, it’s important that your clients choose a product that suits them. Zurich’s ARF includes important features that offer value to your clients.

• No surrender penalties apply on regular incomes or partial withdrawals for income purposes.
• No charge for regular withdrawals - It’s up to your client how much regular income they would like to withdraw from their ARF each year. There are no hidden charges on regular withdrawals.
• No policy fees apply on ARFs.
• Flexibility with their income - It’s up to your clients how much regular income they would like to withdraw from their ARF each year. As we mentioned, there is no charge on their regular withdrawal. To make their income more flexible we can even tailor which fund their regular withdrawal comes from. For example, one of the funds in your client’s portfolio may have a higher return than the others and for this reason they may choose to take their income solely from this fund.

3. Innovative Investment solutions - RetireRight & Fund Rebalancing: Zurich’s RetireRight is an innovative way of managing your clients ARF once they retire. It is built on Zurich’s market leading Prisma Funds, and it offers three investment options, each one catering to clients with different risk appetites. As a person gets older, it will automatically transition their ARF investment from higher risk assets into lower risk assets over a 15-year period, helping to balance income requirements with the need to preserve the capital in later life. Each RetireRight option will gradually move money from its starting point (in the Prisma 5, Prisma 4 or Prisma 3 Fund) into the Prisma 2 Fund over a 15-year period beginning when they reach age 75. The initial starting point is dependent on which RetireRight option is selected at outset.

Introduced in 2024, Fund Rebalancing is an investment strategy which periodically rebalances the weighting of the funds in an investment portfolio. The portfolio will rebalance at a frequency of your clients choosing and in accordance with the fund split they selected, ensuring their investment preference and risk rating remains intact throughout the lifecycle of the policy. Funds can be rebalanced monthly, quarterly, half yearly or yearly. Implementing a rebalancing strategy can offer advantages for both you and your clients. The stability provided by this strategy can simplify the review process and support smooth client interactions.

4. Online access 24/7: With a Zurich ARF, your clients have the power to monitor their investments effortlessly at the click of a button. Offering 24/7 access to Zurich’s client centre, clients can stay informed whether they're keen on tracking every market fluctuation or prefer to check in just once a year. Zurich makes staying on top of their retirement funds simple and convenient.

5. Online supports and calculators: Comprehensive online tools, such as the Retirement Drawdown Calculator, can also help you to guide your customer through the "at retirement" process and highlight the different income options and the associated risks.

6. A trusted pension provider: Zurich Life is one of Ireland’s most successful life insurance companies, offering a full range of Pension, Investment and Protection products. The investment team, based in Blackrock, Co. Dublin, is responsible for funds under management of approximately €41.9 billion, of which pension assets amount to €36.1 billion (as at 31 December 2024).

Annuity or ARF? It doesn’t have to be one or the other

Never rule out the possibility of combining or exchanging an ARF and an annuity – especially as clients progress further into retirement when this option might become more suitable. It's important to discuss the concepts of "active retirement" and "sedentary retirement" to understand if clients wish to, or are able to, stay engaged in the decision-making process. This should be balanced with compliance considerations for vulnerable clients and the need to make ongoing investment decisions in the future.

Want to know more?

For more information speak to your Zurich Broker Consultant or visit zurichbroker.ie.

*Source: Central Statistics Office, Population and labour force projection 2023 - 2057, February 2025.

**Source: Zurich and Moneymate, January 2025. The constituents of the Prisma Comparison averages are multi-asset funds available from Life Company peers in the Irish market (ILAC, SLAC, New Ireland, Aviva), which target a similar level of volatility to the respective Prisma Fund. Where a provider has multiple fund ranges we use the most prominent, and where risk targeting methodologies differ we seek to use the most comparable fund. All unit price information is sourced from Fund Focus (Moneymate). Performance figures are provided gross of AMC by Moneymate. Performance figures for all fund managers are based on close of markets prices 02/01/2025, based on best available information. Annual management fees apply. Returns are based on offer to offer performance and do not represent the return achieved by individual policies linked to the fund.