# AVC's still cost effective?



## alri (13 Jan 2011)

I have being contributing to AVC's to supplement my pension as I did not start payments till my 30's ,it seemed a very effective way of reducing my overall tax burden and planning for future retirement,I now have the option to increase my contributions and my question is does it still make sense?


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## asdfg (14 Jan 2011)

You can get PRSI relief on AVC contributions against 2010 salary till Oct 2011


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## LDFerguson (14 Jan 2011)

You should find out how much you're being charged for your AVCs before making a decision to increase.


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## JoeRoberts (31 Jan 2011)

asdfg said:


> You can get PRSI relief on AVC contributions against 2010 salary till Oct 2011


 
How do you do this if AVC are deducted from salary each month ? Is it just a case of reclaiming from the Dept ? What form should be used ? Presumably then this mechanism could also be used for regular pension contributions, assuming one stays inside the age related limits for the relevant year.

I tried this before a few years back when there was a reduction in paye tax rates but give up as Revenue could not understand what I was trying to do. I had already got relief in year N for AVCs via monthly payroll but wanted to set my AVCs from Jan to Oct in year N off against year N-1 as the top rate was higher then.


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## LDFerguson (1 Feb 2011)

JoeRoberts said:


> How do you do this if AVC are deducted from salary each month ? Is it just a case of reclaiming from the Dept ? What form should be used ? Presumably then this mechanism could also be used for regular pension contributions, assuming one stays inside the age related limits for the relevant year.
> 
> I tried this before a few years back when there was a reduction in paye tax rates but give up as Revenue could not understand what I was trying to do. I had already got relief in year N for AVCs via monthly payroll but wanted to set my AVCs from Jan to Oct in year N off against year N-1 as the top rate was higher then.


 
If your AVCs are deducted through salary, you should already be receiving the relief immediately, for the month in which they're paid.  You cannot elect to obtain relief for a different month.  

The only way around this that I can think of would be to stop your AVCs through salary and arrange with the AVC provider to collect them gross from your bank account if the provider is willing to accomodate this.  Or set up an AVC PRSA to be paid gross.  Either way, you'd then be in a position to claim back your reliefs manually, for the year you want them to apply, within the rules.


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## Brendan Burgess (4 Feb 2011)

Could the employer increase the contributions in the main scheme instead of paying you salary?  

Or is that specifically ruled out now as "salary sacrifice"?


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## Parkview (8 Feb 2011)

That certainly is one way of increasing the amount going into the pension pot. Some employees take bonuses or salary increments as pension contributions which as the years go by makes a significant impact on their pension fund available at retirement.
H


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