Recently various commentators have made the argument that ARFs do not enjoy protection against creditors because ARF funds are personally owned property of the individual and not protected by trust law. I recently saw this view forwarded by the Pensions Ombudsman and (too) readily accepted by commentators.
Whatever about the accuracy of this idea – ARFs can also be established under trust and enjoy protection of trust law – I find it baffling that commentators without discussion willingly accept that providing for retirement in good times is an idea which may be challenged by your creditors when things get bad.
Compare the regime protecting an individual’s transfer of assets to the spouse. Such transactions are, subject to certain criteria, protected by the courts. They are even encouraged by legislation as there is no CAT and no stamp duty. One has got to ask oneself why funds that you set aside for the honourable purpose of not being a burden to the State in retirement shouldn’t be protected while funds siphoned off to the missus is. I don’t see any reason for this.
And whatever the media may want to make you believe, there is no Irish case law to confirm that creditors may come after ARF funds, not even the recent Brendan Murtagh case. In that case it is reported that Mr Murtagh’s lawyers without argument made his ARF funds available to pay his debts.
The ARF regime is an innovative way of dealing with the annuity problem. Why commentators are so willing to sacrifice it when there are many laudable reasons to protect it, is beyond me but then again, the insurance industry never liked ARFs. I also think that the argument is fundamentally flawed. ARFs are protected, subject to certain conditions.
