# Has there been much take-up of the pre-retirement access to AVCs?



## Brendan Burgess (21 Jul 2014)

There was a bit of discussion of this in December 2012, but I have not seen it mentioned lately. 

The Revenue Guide is here:

*Pre-retirement access to AVCs*

The legislation is here: http://www.charteredaccountants.ie/taxsource/1997/en/act/pub/0039/sec0782A.html
 

Has there been any take-up of it? 

It could certainly be useful in reducing over-indebtedness. 

Brendan


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## Brendan Burgess (21 Jul 2014)

I have just reread the original discussion on Askaboutmoney.

This could be a very useful facility for someone who is currently unemployed, whether or not they are over-indebted. 

If someone has made qualifying AVCs and currently has no taxable income, they can withdraw 30% of these AVCs and be subject to income tax at their marginal rate which could be 0%.

Likewise, someone who is thinking of taking a career-break could make AVCs in this tax year, and take back 30% of them during the career break.

Brendan


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## Marc (21 Jul 2014)

Brendan,

Another example is someone who looks like they are going to go over the lifetime limit of €2M.

Early AVC withdrawal isn't a benefit crystalisation event for the purposes of the lifetime limit.

Therefore if you have a large AVC pot, taking the money now would mean that you would "only" pay marginal rates of tax rather than marginal rates plus a fine for saving prudently thoughout your life.....


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## Brendan Burgess (21 Jul 2014)

Hi Marc

A very good point. I am surprised that there has been so little discussion of these planning angles.


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## Steven Barrett (21 Jul 2014)

Brendan Burgess said:


> Hi Marc
> 
> A very good point. I am surprised that there has been so little discussion of these planning angles.



There's not that many people that it applies to...


Steven
www.bluewaterfp.ie


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## Brendan Burgess (21 Jul 2014)

Does it not apply to anyone who has made AVCs? 

Or maybe there would be many of these, but little advantage to them in applying for it.

Brendan


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## Steven Barrett (21 Jul 2014)

It does apply to everyone. Marc's point was that people in danger of going over the standard fund threshold could cash in their AVC's to reduce their potential tax bill. Those people with €2m funds are getting rarer every day. 

The take up for this has been pretty low. Those who want to do it are probably in a bad way financially at the moment. 

I see it as another cynical way for the government to get us to stop saving and start spending again. 


Steven
www.bluewaterfp.ie


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## Gerry Canning (22 Jul 2014)

Inclined to agree with Stephen; 

Would have thought most Avc,s were taken to add a little to top-up a small work pension; these people will really not want to dip into their Avc pot unless they are in dire straits.
Looks like this idea only suits those with large funds, and if they have large Avc funds they probably are still in high tax bracket.


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## finnegan101 (22 Jul 2014)

As marc et al  mentioned, if its a good idea to access your avc pot early will depend totally on the individual circumstances of the person, both now and at retirement. 
For a lot of people who were doing avcs to increase their tax free lump sum , they will find they have already too much in their avc fund, and will be taxed anyway, and in that case it is worth while taking the money now, as they will not have to pay USC and PRSI on the withdrawal. 
If it looks like your pension will be taxed at the higher rate then there is definitely a strong argument for taking now, especially as many will have received 49%( pre the cessation of prsi relief on pension contributions)  tax relief on the money going in, and will only be paying marginal tax taking out now..


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## garbanzo (23 Sep 2014)

I'm a Trustee of a few schemes and the take up rate in my experience has been very, very low. Probably 2% of total membership if even that. There are still a few years to run yet but I would have thought anyone who needed to do this will have done so by now.


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## elacsaplau (23 Sep 2014)

What are providers charging to process these withdrawals?


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## MrEarl (24 Sep 2014)

SBarrett said:
			
		

> ...I see it as another cynical way for the government to get us to stop saving and start spending again.
> 
> Steven
> www.bluewaterfp.ie



Funny,

I don't.....

I see it more as a way to help people release cash they may need desparately now. 

Personally, I would like to see the time limit removed as the possibility of people being able to withdraw part of their AVCs earlier than at retirement (subject to tax) might actually encourage them to put funds into their AVCs, in the knowledge that they can get part of the money back out if ever urgently needed.


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