Purchasing NSP with AVC

cord

Registered User
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I am purchasing years and also have an AVC, but not paying into the AVC at the moment. Is it possible to purchase NSP using the AVC fund without being taxed? As I am not technically withdrawing money but tranferring it to another pension system? If I do withdraw money from the AVC fund what rate will it be taxed at? Lastly! What is the "Marginal Rate of Tax"?
Thanks
 
Hi Cord.

My understanding is you cannot utilise your AVC fund to buy back years.

Marginal tax rate is 20% or 41% depending on earnings!!! If you decide to encash 30% of your AVC fund, pay taxes and levies and then use the remaining balance to buy back years and reclaim tax reliefs that's up to you however you will not get reliefs for USC or PRSI anymore.

May I ask why you were advised to do an AVC over buying back years in the first place if indeed this was the case?
 
Thanks. I was initially involved with AVC's and wasn't happy with the performance. Also, you are very dependent on the markets at your time of retirement. I then went with NSP as a safer bet, but who knows now!
 
Cord, it is possible to use your AVC to purchase NSPs. There would be no tax implications in the purchase as relief is the same for both products and has already been applied to your AVC. You would need to contact your employer for a quote for each year of purchase & contact your AVC provider to request a fund value and the paperwork to authorise any transfer. Once you know how much service you can purchase the relevant paperwork can be arranged between your employer and the AVC provider (you will obviously need to sign it). Your provider should help you work through the process.

Once you get the quote, in order to evaluate the transaction you need to work out the 'break even' point - i.e. how long do you have to live to recoup the money used to purchase the NSP. That will determine whether it is worth purchasing them or not.

Regards,

Andrew
 
Cord, it is possible to use your AVC to purchase NSPs. There would be no tax implications in the purchase as relief is the same for both products and has already been applied to your AVC. You would need to contact your employer for a quote for each year of purchase & contact your AVC provider to request a fund value and the paperwork to authorise any transfer. Once you know how much service you can purchase the relevant paperwork can be arranged between your employer and the AVC provider (you will obviously need to sign it). Your provider should help you work through the process.

Hi Andrew, that is very interesting. Do you have a link to that provision or some other information on this? The document in the link in Leroy's post does not discuss the transfer of PRSA/AVC to the NSP per se. Slim
 
Slim, I do not have a specific link to the provision but the final paragraph of the text in this link shows that it can and has been done [broken link removed]

I have assisted a small number of clients to do this myself and have met clients who have already completed a transfer.

The transfer can be completed at retirement subject to giving your employer plenty of notice (as per page 6 in Leroy's link), or at any time prior to retirement (as per the link above). Any transfer should be considered carefully and analysed in detail. I have seen cases both where the transfer to NSPs made sense and where the client would have been better off sticking with AVCs.

Andrew
 
Started AVC's in 2000, realized in 2008 that I could do NSP, just after they had increased the costings in NSP!! So I am one of the many "Steered" as mentioned here
[broken link removed]

Thanks to all for the info
 
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