# AVC advice welcomed.



## Eastcoast (2 Dec 2006)

Hi all,

I am not very good at pension matters and would appreciate any help or advice with my situation.

I am 48 and have been in a DB company pension for 22 years. I pay 7% and the company pay 7%. I do not have a mortage and have readly available savings. 

I wish to pay additional AVC's to the tune of 8%, this will cost me over a few grand a year. 

The company acturaries invest in AIB, I was thinking about the cash fund for security and the savings been with the tax relief at 42%.

Is it true that I can take a tax free lump sum from this AVC to the tune of 1.5 times my final salary without my DB pension scheme been affected.

One more question, is it a fact that I cannot start up my own AVC so that not all the eggs are in the one basket.

I would really appreciate your advice.

Thanks, Eastcoast.


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## gordongekko (3 Dec 2006)

Why not ask this question of your company pension adviser i am sure he/she is on site at least once a year


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## oysterman (3 Dec 2006)

You can set up your own AVC independent of the company pension scheme. This is what PRSAs are designed for.

How big a fund you would be allowed to accumulate under Revenue rules is down to what your existing fund provides/doesn't provide for you.

Most schemes leave plenty of AVC funding opportunities - particularly due to the commutation of pension income in taking a portion of your pension as a (tax free) lump sum and, additionally, the fact that most schemes only provide a 50% spouse's pension while Revenue now permits funding for a 100% one.

You can only take a portion of your AVC pot tax free if you don't end up with the maximum allowed tax free lump from your main scheme (through being short of full service).


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## Guest126 (3 Dec 2006)

Hi East Coast

Yes, it is a wise idea to use the AVC part of your fund to provide the tax-free lump-sum (within the revenue maximum of 150% of final salary) and therefore not touch your DB pension for the tax-free cash, it makes sense.


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## ajapale (4 Dec 2006)

What are the charges associated with the company approved AVC scheme managed by AIB?

You should get a copy of the rules of the main DB scheme and also a copy of your annual pension statement. Some schemes (mostly but not exclusively public sector schemes) allow members to purchase additional years. If this facility is availiable and you intend working to age 65 it might be worth considering buying three years.






gordongekko said:


> Why not ask this question of your company pension adviser i am sure he/she is on site at least once a year



If one were to judge by the amount of questions posted on the subject of AVC's and DB schemes here on AAM one might conclude that the level of advice provided to employees by companies (and their pensions advisors) is somewhat deficient.


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## Eastcoast (5 Dec 2006)

Thanks all for your help.

The company is private. I had requested a yearly update but was told actuary had not supplied yet (we usually get it in september)

I asked questions to company representative dealing with pension matters, they had to refer my questions to actuary, no reply in over a week.

AIB cash fund has the following.
.3%management fee. No initial fee or entry charge. All contributions fully invested. 

I find it frustrating that the cost savings after tax to pay into these schemes are there to be seen but its not so easy to see what benifit can be got from AVCs into a cash deposit compared to long term saving into bank savings account, as a pensioner you are going to pay the tax back.

Thanks for those who gave good advice.

Regards,
Eastcoast.


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