# Do I have to use my Company's AVC route?



## Redzer (4 Dec 2007)

Hi,

I'm in a DB Company pension scheme (as a PAYE employee) and I'm interested in increasing my pension arrangements with regular AVC's. My employer uses a broker for the main scheme and he will charge 5% of the AVC apart from any fund charges.

Do I have to route my AVC's through him and also would he be expected to offer a full range of products e.g. incl low charge funds and broker unfriendly products (Quinn?)? Initial proposal from the broker is for Canada Life and no mention of what the fund charges are so I'm keen to know what my options are before I go back to him

Thanks,

Redzer


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## Conan (4 Dec 2007)

You have two choices:

Join the AVC Plan attached to the main scheme (you might be able to negotiate the fee with the broker), or
Effect a Stand-alone PRSA AVC. This can be done seperate from the main scheme. A few Life Companies offer this product (Eagle Star for example).
If you go the latter route and are seeking charges lower than you indicated, then in effect you probably need to go the "execution only" (no advice) route.


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## Redzer (4 Dec 2007)

Thanks for that. I'll investigate the PRSA AVC option now that I know that its available to me.


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## ClubMan (4 Dec 2007)

If you go standalone then you will have to claim tax and _PRSI_/health levy relief manually rather than getting it at source via payroll.


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## Redzer (4 Dec 2007)

Yikes! I presume that would only be claimable at start of the following year. Just makes it into a type of savings scheme where you get a lump sum annually.


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## ClubMan (4 Dec 2007)

No - if you are making regular contributions to a personal pension/_PRSA _then _Revenue _will grant you tax relief via an adjustment to your tax credits and standard rate band. You will need to claim _PRSI_/health levy relief manually at the end of the year though as far as I know. See the thread on this in the kep topics.


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## Redzer (18 Jan 2008)

Ok, I got all my documentation together for an Eagle Star Stand Alone AVC PRSA which is different from my Employers prefered AVC PRSA. (Want to go this way due to lower fees).

I submitted it to my Employer who then said that they don't want to administer it (setup direct debit) as its different from their one and if they did it for one they'd have to do it for all => extra admin?

Does my Employer have to administer it if they offer their own PRSA?


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## ClubMan (18 Jan 2008)

No they don't. They have fulfilled their legal requirements by nominating a preferred _PRSA _provider. You'll have to make contributions out of net income and claim tax and _PRSI_/health contribution relief yourself. You may be able to get Revenue to adjust your tax credits so that you get tax relief on an ongoing basis rather than having to claim it at year end. You'll have to claim the _PRSI_/health contribution relief after you have obtained tax relief though.

Claiming PRSI relief on standalone private pension/PRSA contribution


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## Observer (19 Jan 2008)

Conan said:


> You have two choices:
> Join the AVC Plan attached to the main scheme (you might be able to negotiate the fee with the broker), or
> Effect a Stand-alone PRSA AVC. This can be done seperate from the main scheme. A few Life Companies offer this product (Eagle Star for example).
> If you go the latter route and are seeking charges lower than you indicated, then in effect you probably need to go the "execution only" (no advice) route.



What's the difference between a regular, common or garden PRSA and an PRSA AVC?  In other words, if an ordinary PRSA is a contract between you and the service provider, what changes to convert it into a PRSA AVC and what, if any, relationship exists between the occuopational pension and the  PRSA.  

Hope this is clear?  (The question, I mean, not the answer!)


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## Redzer (22 Jan 2008)

My understanding is that they're the same but with AVC's you're not resticted to your employers pension scheme or nominated PRSA provider. Not sure about this though.

With AVC's you can choose to have a standalone PRSA of your (limited) choice. I've gone this way to avoid brokerage charges and minimise fund management charges. I still subscribe to my employers scheme as they match contibutions up to a point.


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## boaber (22 Jan 2008)

Observer said:


> What's the difference between a regular, common or garden PRSA and an PRSA AVC?



If you are an employee in a occupational pension scheme or a statutory scheme, you can make additional voluntary contributions into a PRSA. This is called a PRSA AVC. The PRSA must be established under a rule of the main scheme or under a separately arranged scheme, approved by the Revenue Commissioners, which is associated with the main scheme.  

If you go it alone, your employer has no obligation to facilitate the deduction of payments from your salary.

A PRSA can include Employer & Employee contributions and would usually be set up by the Employer if there was no occupational pension scheme in place already.


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## Observer (22 Jan 2008)

boaber said:


> If you are an employee in a occupational pension scheme or a statutory scheme, you can make additional voluntary contributions into a PRSA. This is called a PRSA AVC. The PRSA must be established under a rule of the main scheme or under a separately arranged scheme, approved by the Revenue Commissioners, which is associated with the main scheme.


 Ok, that seems clear enough, thanks!



boaber said:


> If you go it alone, your employer has no obligation to facilitate the deduction of payments from your salary.


Ok, understand that.  But is a "stand-alone PRSA AVC" just a bog-standard PRSA then?  In other words, does the addition of "AVC" change the nature of the stand-alone PRSA?  Or is it just a looseness of description?


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## boaber (22 Jan 2008)

Observer said:


> But is a "stand-alone PRSA AVC" just a bog-standard PRSA then?  In other words, does the addition of "AVC" change the nature of the stand-alone PRSA?  Or is it just a looseness of description?



It's called a stand alone PRSA AVC, because it runs separately from the main scheme.

A PRSA or a PRSA AVC will use the same _product_ as each other - but will have different contribution types, i.e. Employer/Employer or AVC


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