# Cornmarket AVC



## johnmck (3 Oct 2018)

Hello,

I'm a 38 year old teacher and Cornmarket have been onto me about taking out their AVC. I took the payment protection with them but not the AVC. I wanted to check around first before committing.


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## Protocol (3 Oct 2018)

Cornmarket charges are high, although they do provide advice, etc., and will call to your school or house.

Of course you pay for that in the fees.

I advise PS to get a PRSA-AVC from a discount broker, same funds, lower fees.


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## mula (6 Oct 2018)

Avoid Cornmarket or any other Union based advisors like the plague  for anything other the income protection unless you want poor performance high start up fees with high ongoing costs  and products  pushed on you you dont need.
Make sure you even need an AVC you might not.
Get a quote for buying Notional service first a decent advisor can do this or you can do it your self online.
Get indpendent advice pay a fee and as stated  if you need  and AVC  use a PRSA-AVC make sure it a standard one and not a non standard one.
No allocation rates and no more then a 1%  annual management fee but ideally less.
Tax relief can be claimed on montly contributions through revenue so you dont need salary deduction.

Mula


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## Ravima (9 Oct 2018)

If you don't have full service from age 20, you should seriously consider purchasing notional service. After that, if you want to retire early, do the AVC.


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## mula (10 Oct 2018)

not in all cases


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## dublin67 (11 Oct 2018)

Does anyone know whether it is possible to move AVCs from one service provider to another.

Fact pattern: Nurse (full and pensionable etc) and making standard HSE nurse pension contributions.  Individual had paid c. t c. €30K in Cornmarket AVCs through INMO scheme between 2000 and 2008.  Ceased contributing to AVC c. 2008 and bought back years.  Would like to move AVCs from Cornmarket to another AVC provider where charges aren't so high.

I was particularly surprised when reviewing her paperwork that she was actually charged about IR£600 for the Cornmarket consultation (i.e. sales call) when she signed up to the AVC.


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## mula (11 Oct 2018)

Yes it is possible to move your AVC. If it is under 10k it can be moved to any PRSA AVC provider with no charges expect ongoing management fees levied by the new PRSA provider.

Above 10k and a Actuarial comparsion report is need and is carried out by an actuary. This is then given to the trustees of the scheme and your avc can be moved. 

Cost of a Actuarial comparsion are prohibative unless the fund is very large but there are some specialist companies that provide a no/low cost of transferring a AVC.

Mula


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## Protocol (11 Oct 2018)

The Cornmarket initial fees may be high, yes.

But if the ongoing AMC is the same as other providers, then is there any use in moving?


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## mula (11 Oct 2018)

Yes

Flexibilty to choose a number of different companies with funds that may be alot better then those offered through Irishlife/cornmarket. 
Amc is are only one factor performance should be a big factor when comparing fund managers.
With group avc schemes the client has no control of changes to the charges however with a Standard PRSA-AVC the charges are fixed to a max of 5% contribution charge and 1% AMC. However much lower charges can be found if you shop around.
At retirement the same applies if a ARF or AMRF is required.


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## Gordon Gekko (11 Oct 2018)

mula said:


> Yes it is possible to move your AVC. If it is under 10k it can be moved to any PRSA AVC provider with no charges expect ongoing management fees levied by the new PRSA provider.
> 
> Above 10k and a Actuarial comparsion report is need and is carried out by an actuary. This is then given to the trustees of the scheme and your avc can be moved.
> 
> ...



I don’t think that’s right


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## mula (11 Oct 2018)

Which part?


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## Gordon Gekko (12 Oct 2018)

That a Certificate of Benefit Comparison is required to move one’s AVC PRSA from (say) Cornmarket through Irish Life to (say) Zurich Life, irrespective of its value.


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## Steven Barrett (12 Oct 2018)

mula said:


> Yes it is possible to move your AVC. If it is under 10k it can be moved to any PRSA AVC provider with no charges expect ongoing management fees levied by the new PRSA provider.
> 
> Above 10k and a Actuarial comparsion report is need and is carried out by an actuary. This is then given to the trustees of the scheme and your avc can be moved.
> 
> ...





Gordon Gekko said:


> I don’t think that’s right





mula said:


> Which part?



All of it except for the first part. The certificate of comparison is required if transferring out of an occupational pension scheme to a PRSA. You can transfer PRSA providers without a Cert of Comparison. When you transfer, you can't be penalised for transferring, so no early exit penalties and nothing less than the full value of your pension is invested in the new policy. 

I wouldn't say the costs are prohibitive either, usually €1,000 plus VAT which is reasonably priced for what you are getting and the high level of qualification that the person doing the work has. 

Back to the original question, seeing as the PRSA AVC is "paid up", you have paid most of the costs already. The only fee you will be paying now is the 1% annual management fee, which will be the standard fee for a PRSA anyway. 


Steven
www.bluewaterfp.ie


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## mula (12 Oct 2018)

Gordon Gekko said:


> That a Certificate of Benefit Comparison is required to move one’s AVC PRSA from (say) Cornmarket through Irish Life to (say) Zurich Life, irrespective of its value.



Read my post again. I said the AVC can be moved to a PRSA AVC.

The poster has a Group AVC not a PRSA AVC through the Nurse group scheme adminsitered by CGFS. 

I said the AVC as in group AVC can be moved if under 10k with no Cert and above 10k with cert to PRSA AVC. 

Once its a PRSA AVC  it is no longer part of the group scheme .

PRSA AVC to PRSA AVC can then be made with no costs to transfer. 

This was one of the reasons PRSA's were introduced in the first place.

Group Scheme AVC's are not PRSA AVC's.

Mula


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## mula (12 Oct 2018)

SBarrett said:


> All of it except for the first part. The certificate of comparison is required if transferring out of an occupational pension scheme to a PRSA. You can transfer PRSA providers without a Cert of Comparison. When you transfer, you can't be penalised for transferring, so no early exit penalties and nothing less than the full value of your pension is invested in the new policy.
> 
> I wouldn't say the costs are prohibitive either, usually €1,000 plus VAT which is reasonably priced for what you are getting and the high level of qualification that the person doing the work has.
> 
> ...



I am aware that  there are certs can be arranged for little or no cost in  most cases.
Group scheme funds are not all 1%. 
Again the Nurse has over 30k or so in the group AVC scheme so a cert is required to move it to a PRSA AVC.
At retirement Cornmarket will in most cases move the client into the ARF after max tax-free cash is taken as its "easiet" to do this and then there will be much higher charges with trail commissions attached bringing AMC's as high as 1.75%

Mula


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## LDFerguson (13 Oct 2018)

mula said:


> I am aware that  there are certs can be arranged for little or no cost in  most cases.



Really?  A Certificate of Benefits Comparison must be completed by an actuary with suitable qualifications and professional indemnity insurance.  I'll admit that I don't run into the requirement for such a certificate all that often as there are usually alternative options available that will achieve the same aim without requiring a certificate. But I'd be genuinely interested to know of where one can arrange a Certificate of Benefits Comparison for little or no cost.


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## Steven Barrett (15 Oct 2018)

mula said:


> Read my post again. *I said the AVC can be moved to a PRSA AVC*.
> 
> 
> Mula



Sorry, missed that bit.


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## FourPawedDog (18 Jan 2019)

dublin67 said:


> Does anyone know whether it is possible to move AVCs from one service provider to another.
> 
> Fact pattern: Nurse (full and pensionable etc) and making standard HSE nurse pension contributions.  Individual had paid c. t c. €30K in Cornmarket AVCs through INMO scheme between 2000 and 2008.  Ceased contributing to AVC c. 2008 and bought back years.  Would like to move AVCs from Cornmarket to another AVC provider where charges aren't so high.
> 
> ...


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## allaround (21 Jan 2019)

just looking through this thread, I'm quite some years away from retirement (65, could of retired at 60 though foolishly I broke service for longer than 26 weeks), i'm thinking of going cost neutral at 62 and using cornmarket avc to top up the pension? , any thoughts, what will happen to those retiring at cost neutral on A stamp? in terms of coordinated pension?


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## Early Riser (21 Jan 2019)

allaround said:


> , what will happen to those retiring at cost neutral on A stamp? in terms of coordinated pension?



You get your actuarially reduced Occupational Pension at 62 but you have to wait until 67/68 to get your contributory state pension. You can apply for a Supplementary Pension (from your employer) to bridge the gap in the meantime. You have to meet certain conditions for this (essentially not be in insurable employment or self-employment, and not obtaining, or eligible to obtain, Social Welfare benefits). This is the explanatory note from Dept of Education, but it should be essentially the same elsewhere:

https://www.education.ie/en/Educati...nsions/Teaching-Staff/Supplementary-Pensions/

You may be eligible for Jobseekers Benefit for 9 months after retirement. If granted, you will get Class A credits while "signing on" and you will probably be eligible to remain "signing" for Credits after the payment finishes.(This is useful if you are short years for a full Contributory Pension). In this event, you won't be eligible for the Supplementary until the Jobseeker's payment ends (except in the event that the Supplementary rate that you would have been eligible to receive is higher than the Jobseeker's payment).

Your AVCs are irrelevant as regards the above entitlements. You can use your AVC fund to top up your tax free lump sum to the max allowed by Revenue and transfer any residual to an ARF (or buy an annuity, should you prefer).


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## allaround (21 Jan 2019)

thanks Early Riser, in the event of a cost neutral at 62 I was of the belief that supplementary cannot be claimed until 65?


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## Early Riser (21 Jan 2019)

allaround said:


> thanks Early Riser, in the event of a cost neutral at 62 I was of the belief that supplementary cannot be claimed until 65?



You are correct and I am wrong. Sorry.

You could still apply for the Jobseeker's at 62 (if meeeting eligibility) and remained "signed on" for the PRSI Credits afterwards. Then the Supplementary at 65. Your topped up lump sum from your AVC should be helpful in bridging the gap. If you have any left from your AVC fund after your tax-free top up, you could put in an ARF to help in the interval as well - provided you qualify for an ARF as opposed to an AMRF.


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## allaround (21 Jan 2019)

Thanks,  my only issue is that if refused jobseekers at 62 could it go against psri credits for OAP at eligible age, if all positive i'd nearly increase avc to go at 60 with ARF to maximise income that's if I'm not mistaken


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## Early Riser (21 Jan 2019)

allaround - I recognise your dilemma. I don't think that you are going to get a clear black and white answer to this one. There is a question in the JB application as to whether you are  available for, and looking for, full time work. You will have to confirm that you are in order to qualify. All I can say is that over the past 10 years I have encountered several retirees in esssentially similar situations to yours who have claimed Jobseeker's and remained signed on for credits afterwards. I don't think that any were actually seeking work - or keen to get back working!


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## Conan (21 Jan 2019)

My understanding is that Jobseekers Benefit is available to Class A PRSI ( but not to Class B or D). In addition, if getting Jobseekers, and over age 62, you are not required to be available and actively seeking employment. But Jobseekers Benefit is only payable for 9 months.


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## Early Riser (21 Jan 2019)

Conan said:


> My understanding is that Jobseekers Benefit is available to Class A PRSI ( but not to Class B or D).



allaround has indicated that he is on Class A.



Conan said:


> In addition, if getting Jobseekers, and over age 62, you are not required to be available and actively seeking employment



I am not sure if this is literally true (even if in practice, it is). I think that if over 62 you are not required to engage in the "activation process" (training, etc). An applicant would still need to complete the same application from in which it asks if you are available for, and looking for, work.

Monthly signing is also unlikely to be required after 62. Should allaround retire at 60,however, he will probably have to sign monthly. But I would think it unlikely (in practice) that he will be required to engage in activation if he is a bone fide retiree.



Conan said:


> But Jobseekers Benefit is only payable for 9 months.



True, but if your circumstances haven't changed, then you can remain "signed on" for A credits. Signing for credits is annual.


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## allaround (21 Jan 2019)

thanks though what payment is available after the 9 months given supplementary is not available till 65?


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## Early Riser (21 Jan 2019)

allaround said:


> thanks though what payment is available after the 9 months given supplementary is not available till 65?



If you are referring to Social Welfare, there is no payment "available" that I am aware of. You can remain signed on for Class A credits if you continue to meet the same conditions as for your Jobseekers claim. That's it. Unless you qualified for some other Social Welfare payment, such as Illness Benefit - but then you probably wouldn't be retiring on a cost neutral basis?

Other than Social Welfare you are relying on your Occupational Pension, your retirement lump sum and your ARF drawdown (if applicable). If you had been pre-2004 you could have applied for the Supplementary from 60. This is one of the big differences between these two schemes.


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## allaround (21 Jan 2019)

thanks Early Riser, thus it may be beneficial to fund an AVC for supplementing through maximising lump sum and pension via arf drawdown, that may bring it to near 100%, however, if 'over funding' an avc lets say hypothetically have €350k in at 62 (65k salary) and at that getting 83.6% (minus state) pension and 94.3% lump sun, that would be questionable to have so much in an arf?, any thoughts?, given could take 7.5k out of avc to maximise lump sum to 97.5k, or am I wrong?


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## Early Riser (21 Jan 2019)

That would be quite an AVC fund to have accumulated by the time you are 62!  - Have you built up a lot already?

Others here will advise you better than me on this. However, personally, I would only pay into a fund if I was getting tax relief at the top rate - and up to a level that I could expect to draw down from the fund at the basic tax rate (after allowing for maxing up the tax free lump sum). Don't forget that you will also pay USC on any drawdown and 4% PRSI up to 66.

From what your posts indicate, I take it that you will have close to full 40 years service at 62 and, if so, your actuarially reduced Occ Pension may be in the region of 16K - 17K ? You can calculate for yourself what you could tax efficiently draw down, given your circumstances/allowances any other income you might have (including Jobseekers, if applicable, and State Pension from 67/68). Of course, you can leave any residual to your estate if that eventuality should arise. As I say, I would prefer to think in terms of how much I could tax efficiently draw down while still in this world and able to utilise it (accepting that I don't know how long/short that will be). I wouldn't aim to fund beyond this (nor, indeed, to over-stint now to achieve this).

As indicated, there are others around here better versed in these matters.


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## Conan (21 Jan 2019)

As I have indicated in other posts, it only makes sense to invest AVCs in the following circumstances:
- to maximize the tax-free lump sum
- to fund additional pension income that will be taxed at a lower rate in retirement than the tax-relief on the contributions 

The main attraction is getting tax relief on contributions at say 40% and getting all the AVC fund back as an additional tax free lump sum, because the lump sum payable under the scheme Rules is not at the Revenue max (perhaps because of short service).
Alternatively if the main scheme pension income is at such a level that there will be no liability to Income Tax or if taxed will only be taxed at the lower rate (20%) then AVCs may be worthwhile if tax relief at 40% is available on the contributions.
However one cannot invest AVCs if the main scheme benefits are at the Revenue maximum. So “overfunding “ is not possible. A Public Servant retiring with long service (presumably pre-1994 entrant) is unlikely to have significant scope for AVCs.


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## Early Riser (22 Jan 2019)

Conan said:


> A Public Servant retiring with long service (presumably pre-1994 entrant) is unlikely to have significant scope for AVCs.



Except, I suppose, in a certain salary range - as you indicated in your post, where they can get tax relief on contributions at 40% and pay tax on an ARF drawdown at 20%.

Take a Class D public servant with an expected pensionable salary of €54k and aiming to continue working until full service . They have no scope to increase the tax free lump sum from the AVC fund, but with an Occupational  Pension of €27k, they could draw down up to approx €8k annually at 20% from an ARF (or maybe more). This would still seem worthwhile depending on current life circumstances?


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## allaround (22 Jan 2019)

Thanks Early Riser, Conan, yes I will have a significant amount at retirement as for about 17 years I've been paying 10% of salary, based on some of your points it may now be an option for me to retire at 60 on a cost neutral basis and maximise the lump sum/additional pension, I signed up all those years ago and with hindsight it was sold on a sales basis and not advice or so it now may seem. Is anyone aware of training course on public service pension rules?,


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## Conan (22 Jan 2019)

Early Riser
A civil servant retiring on a salary of €54k with full service will get :
- a pension of €27k, plus
- a tax-free lump sum of €81k (150% of €54k)

In those circumstances there is little or no scope to invest any AVCs. The above is equivalent to Revenue  maximum benefits. One can only invest AVCs if the benefits being provided under the main scheme are less than the Revenue maximum. “Overfunding” through AVCs is not allowed. So there is no scope to drawdown an additional €8k pa in your example.


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## Early Riser (22 Jan 2019)

Conan said:


> In those circumstances there is little or no scope to invest any AVCs. The above is equivalent to Revenue maximum benefits. One can only invest AVCs if the benefits being provided under the main scheme are less than the Revenue maximum. “Overfunding” through AVCs is not allowed. So there is no scope to drawdown an additional €8k pa in your example.



I am open to correction on this, Conan, but for the moment I think I am right. The Revenue maximum is 2/3 of pensionable salary, whereas the Public Sector schemes provide for a maximum of 50%. In the above example 2/3 of €54k = €36K. Therefore, the retiree could withdraw up to €8k from the ARF - No? I am looking at these for guidance -


_"To calculate how much you should invest in an AVC, you must look at the shortfall between what you will receive under the Superannuation Scheme and the maximum retirement benefits that Revenue allows. Under Revenue rules, the maximum benefit payable to an employee at normal retirement age should not exceed apension of 2/3rds of their final salary. Public Sector Superannuation Schemes pay benefits in the form of a lump sum and a pension. These Schemes pay a maximum lump sum of 1½ times pensionable salary and a maximum pension of ½ pensionable salary. 

In most cases, the maximum Superannuation Scheme benefits are less than the maximum benefits permitted under 
Revenue rules."_(Cornmarket)

_"Public servants who will have the *maximum service allowable* at retirement age cannot avail of PNS..............................For some who cannot avail of PNS as they will have full service at retirement they may be able to opt for an AVC to increase their retirement benefits (subject to Revenue limits)"._ (The Pensions Authority).

If the above are incorrect or misleading, could you give me some references re public service defined benefits schemes? Thanks.


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## Conan (22 Jan 2019)

Early Riser
No.
The Revenue limit of 2/3rds must also take into account the lump sum. So a pension of 50% plus a lump sum of 150% of Salary is equivalent to 2/3rds Pension. 
For an individual with 40years service, there is unlikely to be any benefit shortfall to fund through AVCs. The only possibility might be if the individual has non-pensionable income (eg. overtime, allowances etc) which could be pensioned through AVCs.
The Cornmarket text is potentially somewhat misleading.


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## Early Riser (22 Jan 2019)

Thanks for that Conan. 

In that event the Cornmarket text certainly appears misleading - and the Pensions Authority text requires clarification also.


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## elacsaplau (22 Jan 2019)

Conan said:


> The Revenue limit of 2/3rds must also take into account the lump sum. So a pension of 50% plus a lump sum of 150% of Salary is equivalent to 2/3rds Pension.



Hi Conan,

I know, historically, that the above would be true. Is it still the case from a Revenue Maximum perspective?

- Say someone earning €80k p.a.

- Rev max (private sector!) is 2/3 of €80k = €53.33K

- Public sector scheme provides €40k pension & €120K lump sum

- Can it not be argued, from a Revenue max perspective, that the €120k lump sum is the equivalent of €3.6k pension (at an annuity rate of 3%), thereby providing scope for almost €10k additional pension?

*****

Could this be what Cornmarket means?

Isn't this more consistent with SFT calculations?

I'd appreciate any clarification!


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## Conan (22 Jan 2019)

Elacsaplau
This is not how Revenue calculate the numbers. A pension of 50% plus a lump sum of 150% is the equivalent of 2/3rds of salary. Generally a factor of 9:1 is used to convert the lump sum into pension equivalent. So €120 is equivalent to €13,333 in Pension terms. So added to €40,000 gives a total of €53,333 ( ie 2/3rds).


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## elacsaplau (22 Jan 2019)

Thanks Conan,

I get it that historically 9:1 created equivalency.

What seems strange is why the Revenue capitalise pensions using factors of 30plus for SFT purposes (which makes sense) and then use a factor of 9:1 for the reverse transaction (which makes no sense). [I am not saying that this is not the Revenue's approach, I am just saying it's illogical which...…..probably means that it is, indeed, the Revenue's approach!!]


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## FourPawedDog (21 Feb 2019)

Hi - Regarding the Supplementary Pension - Is this something that is paid by ones employer (within the specified conditions) up to 65 or 68 if opting to voluntarily retire at 60? Not being entitled to the State Pension until 68 means I am unsure whether I would have to fund a gap between 65 and 68 or not? Thanks.


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## Early Riser (21 Feb 2019)

The Supplementary Pension may be payable to a public sector Class A PRSI employee (in retirement) after they reach normal retirement age - 60 for pre-2004 people or 65 if post-2004. You apply to your ex-employer (who is paying your occupational pension) and you will be required to show you meet the conditions.

Have a look at the Department of Ed Explanatory Note here - it is pretty much standard (but the application procedure may vary across employers) :
https://www.education.ie/en/Educati...ns/Supplementary-Pension-Explanatory-Note.pdf


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## FourPawedDog (21 Feb 2019)

Thanks Early Riser. I am just trying to clarify if the Supplementary Pension is paid up to 65 or 68?


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## Early Riser (21 Feb 2019)

daithicuc said:


> I am just trying to clarify if the Supplementary Pension is paid up to 65 or 68?



 It is payable in lieu of a payment from the Department of Social Welfare in a case where the retiree does not qualify for same. The relevant SW payments are generally Jobseekers Benefit and Contributory Pension.

So, if your normal retirement age is 60 (and you take retirement), and you are not working afterwards, you can apply for Jobseekers. This only lasts for 9 months. You can then apply for the Supplementary Pension. If granted (and you continue to meet the conditions in the meantime) this remains in payment until the State Contributory Pension kicks in (at whatever age is relevant to you - 67 or 68).


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## Cityman (21 Feb 2019)

Conan said:


> Early Riser
> A civil servant retiring on a salary of €54k with full service will get :
> - a pension of €27k, plus
> - a tax-free lump sum of €81k (150% of €54k)
> ...



Sorry for dredging this up...
So are you saying, for example, that a public servant retiring with let's say near full benefits could only use an AVC to fill any shortfall to full PS pension? 
Does it work differently in private sector and occupational pension scheme?
I thought the whole concept of AVCs was to be able to build up extra pension?


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## FourPawedDog (22 Feb 2019)

Perfect - thanks for the clarification Early Riser. Much appreciated.


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