Last Minute AVC advice

U

UbiquitousQ

Registered User
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Hi

Hoping you might have some insight to Last Minute AVCs. Was speaking to someone in Cornmarket about it last week so know how it works with fees etc, but he said my maximun I could invest was about €20K. It says on Money Maximising's website:

If you have less than 40 years of service at retirement, you will have a tax-free lump sum shortfall. This is basically the difference between the tax-free lump sum that you have earned with your years of service and the maximum Lump sum you would have earned if you worked the full 40 years of service.

Your tax-free lump sum shortfall is the optimum amount of funds to be transferred into an AVC.​

By my reckoning then, if I have 40 yrs service at my current annual rate of pay, i'd be getting about €139K in my lump sum. When I plan to retire next year I'll have 31 yrs service so potentially €104K if I waited to draw it down at 60 - shortfall of €35K. As I'll be taking acturaily reduced and would like to draw it down on retirement date, I will be getting approx €92K which is a shortfall of €47K (these are all rounded).

I pay a civil service pension contribution of 1.5% and ASC so my taxable income for this year will be approx €84K, and I'll be paying approx €22K tax.

Obviously I want to get the maximum benefit of a Last Minute AVC, so be good to get some perspective on how much I can invest (not looking for the exact amount - just the theory on how it should work). Have tried the various websites but they all want a phone consultation so the info is not that forthcoming.

Ta :)

UBQ
 
As you have over 20 years service Revenue will allow you to top up the tax free lump sum to a maximum of 120/80 of pensionable remuneration at normal retirement age. If you take early retirement this maximum is reduced. In the case of CNER the Revenue max is A*B/C where A is actual service, B is the max lump sum attainable (in this case 120/80), and C is total potential service to normal retirement age.

Example: John is taking CNER at 54 with 31 years service. His normal retirement age is 60. His pensionable remuneration is €92,000.

Revenue max at NRA = €138,000
Potential service at NRA = 37 Years.
Revenue max lump sum with CNER at 54 = 138,000*31/37 = €115,621.

John can use AVCs to top up the Superann lump sum to this amount.
 
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You can make an AVC for your earnings in 2022 provided you make the payment before the end of October 2023.You can also make an AVC for your 2023 earnings and any earnings in 2024.
The maximum AVC amount will be the age related tax allowable percentage minus your employee pension contribution per year.
You would get a better deal from a broker than you will get from Cornmarket.
Try LD Ferguson or Gerard Sheehy (PRSA.ie). Both are regular posters on askaboutmoney.
 
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Thanks Early Riser and S class - i'll checkout those 2 suggestions.

I will be 51 with 31 year's service on the date I plan to retire. Are these calculations right?
  • My annual salary will be 92,800.
  • Revenue Max at NRA = 139,200
  • Potential Service at NRA = 40 years
  • Revenue max lump sum at CNER @ 51 = 139,200*31/40 = 107,880
So my Last Minute AVC top up shoud be about €25K

The guy in Cornmarket said I can't apply until I know my retirement date and to do it about 6-8 weeks before it so that they can calculate how much I can invest based on my service at retirement.
 
UbiquitousQ said:
  • My annual salary will be 92,800.
  • Revenue Max at NRA = 139,200
  • Potential Service at NRA = 40 years
  • Revenue max lump sum at CNER @ 51 = 139,200*31/40 = 107,880
Click to expand...

That Revenue max calculation looks correct.
But what lump sum do you expect to receive from Superann with CNER? For 31 years service at NRA it would be 92,800 *93/80 = €107,880. At 51 it would be reduced to 84% = €90,600. So that leaves a potential lump sum top up of €17,000. Or am I getting it wrong?

As @S class indicated, your AVC is not limited to this amount but the amount you can draw down tax free is.
 
My subtraction skills are obviously not the best!!! :oops:

Based on the pension modeller, I should be getting about 92K - so €15K
 
Assuming you are pre 95.
If you are not going to continue working elsewhere, consider this.
Retiring at age 51 gives you the potential to gain 15 years of reckonable Prsi contributions up to age 66. If you gain 260 full rate paid contributions you can qualify for a Pro rata contributory pension. You could gain a few years of Class S contributions (5000 euro per year ARF drawdown) if you maximize your AVCs and set up an ARF, after taking your max tax free lump sum. After exhausting the ARF, you could work for 1 week at class A and then sign on for credits.
 
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Sorry to hijack a thread, I would like to make an AVC before Oct 31st to use up my allowance I didn’t use for 2022. My revenue calculates the balance amount elligable to be approximately 12k. If I make the 12k payment to my occupational pension fund and resubmit my tax return for 2022 how long will it take usual to get a refund? Is this a lump sum back in my bank account or do they amend my tax credits for 2023?
 
I did this a few years ago and don’t recall having to wait too long for my tax refund.

g
 
FANTANA said:
Sorry to hijack a thread, I would like to make an AVC before Oct 31st to use up my allowance I didn’t use for 2022. My revenue calculates the balance amount elligable to be approximately 12k. If I make the 12k payment to my occupational pension fund and resubmit my tax return for 2022 how long will it take usual to get a refund? Is this a lump sum back in my bank account or do they amend my tax credits for 2023?
Click to expand...
I got refunds each year. Jan this year was the quickest done through my account form e12 they ask upload a copy of cert from then pension provider Money was in my account 2 working days later. Was waiting a week for pension provider to issue the certificate. But pervious years did in Oct step time took about 3 to 4 weeks as everyone is busier that time of year.
 
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