Although an Approved Retirement Fund’s primary purpose in retirement is to provide a source of income for the retiree, another factor to consider for those that have an ARF is that ARF withdrawals can result in a PRSI record being accrued for the individual which can be very useful for boosting their PRSI credits and accessing state benefits such as the State Pension (Contributory).
The Department of Social Protection has advised that PRSI Class S should be deducted by Qualifying Fund Managers on ARF withdrawals. That is the same class of PRSI that applies to self employed workers. In theory Class S PRSI applies only where the individual has relevant income of €5,000 more.
However as the ARF provider will not know whether the individual has other earnings, they will most likely deduct Class S PRSI @ 4% on any ARF withdrawals made. Therefore those who have relevant income of less than €5,000 but who paid PRSI on their ARF withdrawals could seek a refund of any PRSI paid from their local tax office.