# AVC Pension



## idonno (29 May 2020)

Hi All 

I am planning to increase my AVC contribution. I am a member of a contributory pension in a private company.  My question is 
Can I choose any pension provider for AVC contribution in Ireland or am I restricted to pension provider that my company deals with ( its Zurich life btw)?

thanks


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## LDFerguson (29 May 2020)

You can set up an AVC PRSA with any company you choose.  You'll still need to make sure that your total contributions and total benefits don't exceed any Revenue limits.   

Contributions to your employer's chosen AVC scheme will receive tax relief at source through payroll.  If you set up an AVC PRSA you pay gross from your own bank account and then claim your tax relief yourself.

Liam D. Ferguson
www.ferga.com


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## AhComeOn (29 May 2020)

LDFerguson said:


> You can set up an AVC PRSA with any company you choose.  You'll still need to make sure that your total contributions and total benefits don't exceed any Revenue limits.
> 
> Contributions to your employer's chosen AVC scheme will receive tax relief at source through payroll.  If you set up an AVC PRSA you pay gross from your own bank account and then claim your tax relief yourself.
> 
> ...




Hi Liam - In the vein of what you have noted above, I would be interested in your thoughts on the below. I emailed the Pension Authority last year and they advised the following:

_'If one is a member of an occupational pension scheme which offer access to AVCs then it is not possible to invest in a*(n AVC)* PRSA. One may invest in a PRSA in addition to contributing to a pension scheme including AVCs however there may be tax implications' _(Brackets mine for clarity based on context of my query)

On the tax implications referenced to by the Pension Authority, I note from Revenues Chapter 24 (Pensions Manual):

_Tax relief is allowed against “relevant earnings’’, which means earnings from a trade, profession, office or employment (section 787B Taxes Consolidation Act 1997 TCA). *However, an individual who is a member of an approved scheme or a statutory scheme* (other than a scheme which is limited to the following benefits – death in service gratuity, pension to surviving spouse, civil partner, children or dependants) may, in relation to his or her income from the office or employment, *only claim relief in respect of additional voluntary contributions (AVCs) to a PRSA.* _

So if the Pension Authority are saying that I cant invest in an AVC PRSA if I have access to AVCs via my occupational scheme and Revenue is saying that you can only claim relief in respect of AVCs to a PRSA...does that leave you between a rock and a hard place? I'm not an expert by any stretch, so assuming there is a lot of nuance I am missing. Would appreciate any insights you might have.


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## RedOnion (29 May 2020)

AhComeOn said:


> (Brackets mine for clarity based on context of my query)


Did you add the words within the brackets as well?



AhComeOn said:


> On the tax implications referenced to by the Pension Authority, I note from Revenues Chapter 24 (Pensions Manual):


Chapter 24 relates solely to PRSAs.

You can make an AVC to your occupational pension scheme, and claim tax relief on it.

Chapter 24 doesn't apply if it's not a PRSA.


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## AhComeOn (29 May 2020)

RedOnion said:


> Did you add the words within the brackets as well?
> 
> Chapter 24 relates solely to PRSAs.
> 
> ...



I did add the word in the brackets as my query was in relation to AVC PRSAs. _(_Original Query to Pension Authority: _Is it possible to invest into an AVC PRSA if you already invest in an AVC through work scheme)_

So if you have access to AVCs via your occupational scheme, can you set up a separate PRSA not attached to your occupational scheme AND claim tax relief? Rationale for query is having access to retirement savings at 50 under PRSA versus 55 under occupational scheme rules.


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## LDFerguson (29 May 2020)

I suspect that some confusion is arising between a PRSA and an AVC PRSA.  While the two are quite similar, they are two very distinct products.  I'm going to assume that you have one source of earned income.  If you want to make additional contributions towards your retirement, you can either use the AVC facility provided by your employer or start an AVC PRSA of your own choosing.  While it's possible for you to contribute to a PRSA, you won't get tax relief on such contributions so there's very little point in doing so. 



AhComeOn said:


> So if you have access to AVCs via your occupational scheme, can you set up a separate PRSA not attached to your occupational scheme AND claim tax relief? Rationale for query is having access to retirement savings at 50 under PRSA versus 55 under occupational scheme rules.



No.  An AVC PRSA must always be linked to your occupational pension scheme and you must draw the benefits at the same time as the main scheme.


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## ThomasAquinas (6 Jun 2020)

Sorry to add to somebody else’s thread can I query I was in a dB scheme that became dc but along the way I did as the above poster asked and had a separate avc set up with a different company. I have been getting relief on those payments should I have not???? I’m so scared having read this?


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## LDFerguson (6 Jun 2020)

Ruththeboot said:


> Sorry to add to somebody else’s thread can I query I was in a dB scheme that became dc but along the way I did as the above poster asked and had a separate avc set up with a different company. I have been getting relief on those payments should I have not???? I’m so scared having read this?



If it was an AVC PRSA set up correctly, with reference in the initial application to the main DB or DC scheme, then it sounds okay.


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## ThomasAquinas (6 Jun 2020)

Thanks so much for the info I will look into it Christ I got a fright revenue scare me and if I was claiming relief for 20 yrs I wasn’t due it would be chronic.


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## idonno (10 Jun 2020)

hi @*LDFerguson*

Any recommendation for AVC PRSA? 

I aim to invest in international equity so looking to AVC PRSA with low charges. My current pension agent is Mercer and the company is Zurich. 

thanks


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## LDFerguson (11 Jun 2020)

idonno said:


> hi @*LDFerguson*
> 
> Any recommendation for AVC PRSA?
> 
> ...



As I'm a broker, I can't make recommendations without knowing your full financial details, assessing your attitude to risk etc.  Only then could I recommend a product that's suitable *for you*.  Product A might be suited to Person X but utterly unsuitable for Person Y.  

If you go with Mercer in the incumbent AVC scheme what would the charges be?  If you're willing to dispense with financial advice and recommendations, you can choose your own AVC PRSA from an execution-only broker with 100% allocation and 1% annual charge.  Is that better or worse than the Mercer AVC?  There are a couple of good execution-only brokers that post here on Askaboutmoney.


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