# Show Me The Money - 12th Feb



## ClubMan (12 Feb 2006)

I haven't been following this series at all and just caught a few minutes of the show tonight. I noticed _Eddie _talking about _AVCs _through a _PRSA _being a good way to save due to the tax relief (42% in this case). Like many people _Eddie _seemed to ignore the significant fact that up to 6% PRSI/health levy relief is also available meaning that for some people each €1 into the pension will effectively cost them €0.52.

Also - the husband was tasked by _Eddie _with investigating _AVCs/PRSAs _but admitted to not having a clue. Instead of recommending independent, professional advice they seemed to be dealing with tied agents (at least I presume the one shown was an _Eagle Star _tied agent given the _Eagle Star_ eagle statue on his desk).

I realise that the show can only gloss over many of the relevant issues but I believe that these are small but important ones even for casual viewers and would not have taken much time to mention.


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## Marcecie (12 Feb 2006)

Clubman you would make a great detective I watched programme but never spotted the Eagle star statue


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## Covenant (13 Feb 2006)

Spotted that too Clubman. My guess is that PRSI and Health cntribution relief of 6% up to €46,000 in Budget 2006 and €44,180 in Finance Act 2005 reducing to 2% above, was cut to the income tax rate because of the complexities of explaining that on a tv show like this which is more about entertainment and less about education.

Their income was 42K but there was a reference to another 11k so with their earnings spanning the threshold between low and high income tax of 41k or 23k more if the extra income was hers and allowable for individualisation the marginal rate of relief on an AVC might have settled somewhere between 20% and 42% plus 6% PRSI and Health Contribution relief which itself could have declined to 2% over 42K. I've a headache already. Didn't spot the Eagle Star reference where was that? Bus drivers should go to top independent sources but they don't. The low paid market is dominated by direct and tied advice which is one of the reasons that although PRSA's have failed the market has been hovered up by Irish Life and Ark Life.


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## Brendan Burgess (13 Feb 2006)

Yes, it was an interesting programme and the AVCs was the most important part. This guy should not be making AVCs unless he is getting the full tax relief on them and Eddie should have pointed that out. 

I was wondering who the advisor was and did not notice the Eagle Star statue. 

Eddie dealt well with the wife's business ideas. 

It was interesting to see a couple who were managing their money well for a change. 

Brendan


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## contemporary (13 Feb 2006)

Could she talk!!!! The wife did very well investigating the creche business, so many of these business are set up on a whim, nice to seea SMTM show were someone didnt have the "usual" money woes but rather wanted to do something with their savings


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## TarfHead (13 Feb 2006)

That was a much more satisfactory programme than other in the series. A couple of adults making mature decisions about their future, instead of the .. well suffice is to say I didn't have much sympathy or respect for some of the other subjects in this series.

I copped the Eagle Star reference, but only from them walking outside the building in Blackrock.

I would say that programme has caused a number of CIE employees to have nightmares about their pension provisions. €110 per week ? That erodes one of my public sector prejudices.


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## Winnie (13 Feb 2006)

But what about there existing savings of €92k?  Eddie didnt give any advice on how this should be invested to maximise its worth - no point in leaving it in a low yield deposit a/c where it will just lose value?  It annoyed me that there was no more advice on this!
Basically the only thing I took from the show was to invest in AVCs & do business plan before even thinking of going into business.


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## ClubMan (13 Feb 2006)

Brendan said:
			
		

> It was interesting to see a couple who were managing their money well for a change.


Were they actually managing their money well? They had €90K in savings but I didn't see enough to know where they had this. If they had most or all of it on deposit then that's not really good financial management (allowing for the fact that they might have had it liquid in case they started one of the businesses mentioned).


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## kazbah (13 Feb 2006)

I'm very impressed that with a total family income of €42,000 ish they had €92,000 in savings.


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## Allen (13 Feb 2006)

ClubMan said:
			
		

> Instead of recommending independent, professional advice they seemed to be dealing with tied agents (at least I presume the one shown was an _Eagle Star _tied agent given the _Eagle Star_ eagle statue on his desk).


 
I expect that this is because the bus company (or the Union, whichever has arranged for AVCs) will only allow AVCs to be done through Eagle Star.


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## fobs (13 Feb 2006)

> I expect that this is because the bus company (or the Union, whichever has arranged for AVCs) will only allow AVCs to be done through Eagle Star.


 
I suspect you could be right here. Were I to do AVC's I have to do it through the approved companies of my company pension scheme.


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## ClubMan (13 Feb 2006)

Can employers/occupational schemes put such a restriction on where the employee can put _AVCs_?


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## jem (13 Feb 2006)

ya, well the trustees can and often these are who the pension  is through in the first place. an example of this was a few years ago a client wanted to do avc's but had no faith whatever in the company the pension was with and the charges were high and there was some carpetbagging possibilities. mercers who were the "trustees" and the brokers wouldn't allow it had to go through them. client wasn't impressessed at all.


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## ClubMan (13 Feb 2006)

I see. I sort of assumed that individuals in pensionable employment could always contribute the minimum to their occupational scheme (usually to benefit from whatever level of matching contribution offered by the employer) and then take out a _PRSA _for _AVCs _on the side (and still claim full tax/_PRSI_ relief on the lot within the age related tax/_PRSI _relief limits).


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## Theo (13 Feb 2006)

This touches on a pension query i have been trying to get answered by the pensions board for some time.  Everytime i ask a query, i just get a long speel about the usual tax reliefs etc.  i'm not sure anybody in there understands pensions.
I am in a job that offers no pension, so i took out a personal pension some years ago. its doing very well.  however, i'm going to leave my job soon for another job that does offer a pension scheme.  I have to join this occupational scheme. However, i do not want to terminate my personal pension plan as it is doing nicely.
The rules of my personal pension allow me to transfer its assets into a PRSA.  
My question is:  if i do this, does anyone know if i can continue to contribute into this new PRSA and claim the tax relief, as well as joining the occupational scheme (i have to join this, no choice) and get the tax relief here.  The aggrgate tax relief of the two would equal the max i can get for my age.
thanks

t


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## Conan (13 Feb 2006)

Whilst you cannot transfer your Personal Pension fund into your new Employer's scheme, you can establish an AVC PRSA and seek to transfer you Personal Pension into that. You can then continue to contribute to the AVC PRSA alongside your new Employer scheme.
Personally you are limited to what you can contribute to both the Employer scheme and the AVC PRSA (% of salary depends on age). If you establish a standalone AVC PRSA you do not need the approval of your Employer, but they do need to know that you are contributing to an AVC PRSA for benefit aggregation purposes.
If you are happy with your existing Personal Pension, then you might effect an AVC PRSA with the same provider (subject to comparing charges).


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## Theo (13 Feb 2006)

That's great Conan, thanks.  This is the first time this has been explained to me without all the jargon.


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## asdfg (15 Feb 2006)

> If you establish a standalone AVC PRSA you do not need the approval of your Employer, but they do need to know that you are contributing to an AVC PRSA for benefit aggregation purposes.


 
At what point does the employer need to know that you are contributing to an AVC PRSA. 

Can you wait until you are due to retire.


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## ClubMan (15 Feb 2006)

I didn't think that they needed to know if you were only getting tax/_PRSI _relief at source through payroll on your occupational scheme contributions but were manually claiming tax/_PRSI _relief manually on standalone _PRSA AVC_ contributions. I don't understand the bit about "benefit aggregation".


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## Theo (15 Feb 2006)

ClubMan said:
			
		

> I didn't think that they needed to know if you were only getting tax/_PRSI _relief at source through payroll on your occupational scheme contributions but were manually claiming tax/_PRSI _relief manually on standalone _PRSA AVC_ contributions. I don't understand the bit about "benefit aggregation".


 
I believe Conan is referring to aggregating the tax relief you can claim on the PRSA together with the tax relief you are getting from the occupational scheme, so that the together add up to the max allowable for any given age profile.


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## ClubMan (15 Feb 2006)

I still don't understand why the employer needs to know - they grant tax relief on occupational contributions made through payroll. The employee makes his/her own _AVC _contributions through a _PRSA _and claim tax/_PRSI _relief manually. _Revenue _will do the aggregation and grant tax/_PRSI_ relief up to the relevant age related limits. The employer only needs to know about this if the _AVC _contributions are also being made via payroll with tax/_PRSI_ relief granted at source. Otherwise I don't see that they need to know and some employees might prefer to keep such matters private from them for one reason or another. Am I wrong?


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## Theo (15 Feb 2006)

I would have thought so too.  Conan?


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