# Public Service Pension   AVC'S top up



## Daddy Ireland (9 Mar 2017)

My wife recently took up employment in the Public Service and is contributing towards a pension under the Single Public Service Pension Scheme (SPSPS).

From what I gather, she can contribute AVC's on a stand alone basis I think through Cornmarket or Insurance companies and not directly as part of the SPSPS . Would there be any other options open to her whereby she can maximise the contribution for her age being 35% as aged 55 next birthday ?  Would she be eligible to take out a PRSA perhaps ?  What would be best advice on how to proceed? 

Thanks.


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## Daddy Ireland (9 Mar 2017)

Sorry I should have added that my wife would intend retiring at 60 so the contributions would be for approx 5 years x 18k per annum so very short term but worth it for the tax relief and taking of the 25% tax free at age 60.


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## Protocol (9 Mar 2017)

She does not have to use Cornmarket broker.

She can buy an AVC-PRSA herself.


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## Gordon Gekko (10 Mar 2017)

Protocol said:


> She does not have to use Cornmarket broker.
> 
> She can buy an AVC-PRSA herself.



But cannot get tax relief through payroll via anything other than a Cornmarket product, correct?


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## Daddy Ireland (10 Mar 2017)

I think if my wife takes out a Public Sector PRSA and has less than 9 years service then she cannot avail of the 25% tax free lump sum.  As service will be 5 or 6 years max then that rules that option out as getting the 25% is very important.  So maybe the AVC's route might be best.


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## Protocol (12 Mar 2017)

Gordon,

yes, correct.


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## GSheehy (15 Mar 2017)

Gordon Gekko said:


> But cannot get tax relief through payroll via anything other than a Cornmarket product, correct?



When the policy is issued you will receive a PRSA Certificate. You send this into your local revenue office so they will amend your certificate of tax credits and send the revised one to the employer. You then get your tax relief as part of your salary every month. 

If you increase your contribution a revised PRSA Certificate will be issued and you then send the new one to revenue.

The sellers of these products make this out to be a big negative. I suppose, if you've Cornered the Market, that suits. I've even had emails from Public Servants stating that they have been told that they are not eligible to do a PRSA AVC outside of the scheme. 

A stamp and a short cover letter to save yourself up to 5% of every contribution? How bad.


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## Daddy Ireland (17 Mar 2017)

Thanks for all the replies.

Just referring to my post no 5 above am I correct in stating that if retiring at age 60 from the Public Service my wife cannot avail of the 25% tax free if taking out a Public Sector PRSA now as she must have 9 years service to avail of the 25% ?

So she can just go ahead outside of the Public Service and separately take out a AVC PRSA and if doing this she can draw down 25% at age 60 having paid in 5 single contributions x 18k p.a  

If I am correct therefore there is a big drawback in taking out a Public Service PRSA in accessing the 25%.


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## Steven Barrett (24 Mar 2017)

There is no 25% tax free lump sum for your wife. If she is in the public service, she is in a defined benefit pension scheme and her tax free lump sum is based on years service and salary. If she has just taken up a roll there, they use career average to calculate the salary part. 

If she makes additional contributions herself, this is into an AVC plan (Cornmarket) or a PRSA AVC plan (if she does her own thing). This plan is linked to her employment as a public servant and subject to all the rules of the scheme ie the tax free lump payable. When she retires, she can buy back years, purchase and annuity or invest in an A(M)RF with the value of the AVC's. 


Steven
www.bluewaterfp.ie


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## Daddy Ireland (24 Mar 2017)

Thanks Steven.

So even though my wife can take out a PRSA AVC  she is not really doing her own thing as the plan would be linked to her public service employment.  That Cornmarket scheme appears to be loaded with charges.   I was thinking of doing a standard PRSA through LA Brokers for my wife.   No charges just the 1% management charge.  So are you saying this option is a non runner for the PRSA.  I have to admit the layman is at a complete loss to understand pensions and especially public sector pensions.  Appreciate the help.


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## Conan (24 Mar 2017)

The clue is in the title - "additional voluntary contributions". If your wife wants the benefits of tax relief, then the contributions have to be part of an approved pension arrangement. Since your wife is a members of the SPSPS then any "additional" contributions must be linked to her main scheme. Therefore when she retires, the value of the AVC fund will be added to her main scheme benefits.  

Unless your wife has separate earned (pensionable) income, she cannot invest additional pension contributions other than via an AVC. 

She can establish an arrangement via Cornmarket (and benefit from tax relief under "net pay") or establish a "stand-alone" PRSA AVC ( but having to reclaim tax relief subsequently).


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## Daddy Ireland (24 Mar 2017)

Thanks Conan.

Via Cornmarket I think 5% of every contribution is deducted plus 1% management charge p.a

Stand alone PRSA avc through LA Brokers just the 1%

Makes no sense to go Cornmarket route.


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## Username2012 (24 Mar 2017)

Is it possible to get a cheaper AVC PRSA than the 1% p.a.? Partner also recently joined public sector and was looking into the options. Scandalous that the union's have not negotiated a better deal....


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## Conan (24 Mar 2017)

Username2012 said:


> Is it possible to get a cheaper AVC PRSA than the 1% p.a.? Partner also recently joined public sector and was looking into the options. Scandalous that the union's have not negotiated a better deal....


Could that be because the Unions are getting part of the charges as a "kick-back"???


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## POC (24 Mar 2017)

I rang Cornmarket a few weeks ago. I was told the AMC is 1.75%, the contribution charge is 5% initially but averages out at 3.75% on maturity. There also is a fee of €450 to meet their consultant.

Needless to say, I will continue to look into other options.


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## Conan (24 Mar 2017)

POC said:


> I rang Cornmarket a few weeks ago. I was told the AMC is 1.75%, the contribution charge is 5% initially but averages out at 3.75% on maturity. There also is a fee of €450 to meet their consultant.
> 
> Needless to say, I will continue to look into other options.


This is a very expensive set of charges. I would certainly look elsewhere.


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## Steven Barrett (26 Mar 2017)

Username2012 said:


> Is it possible to get a cheaper AVC PRSA than the 1% p.a.? Partner also recently joined public sector and was looking into the options. Scandalous that the union's have not negotiated a better deal....



It is but you need to pay a fee for the set up. A lot of public service AVC plans are pretty small so some contracts are not available such as self directed schemes. 

The one area that Cornmarket is a benefit is that they have all the systems and software to calculate lumps sums and benefits. Public service pensions are very complex, with a lot of different rules and differents benefits depending on when you joined the PS. Cornmarket have the expertise to deal with all that. It is their sales approach of just form filling and giving very little advice than rankles. 


Steven 
www.bluewaterfp.ie


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## eggerb (3 Apr 2017)

SBarrett said:


> There is no 25% tax free lump sum for your wife. If she is in the public service, she is in a defined benefit pension scheme and her tax free lump sum is based on years service and salary.



Is this because she will have less than 9 years of service at retirement? 

If she had more than 9 years service, would she be eligible to top up her tax free lump sum? Say she had 20 years service, could she have matched the lump sum paid by her scheme with an equal amount from her AVC PRSA? What would be the maximum tax free lump sum she could fund from her AVC PRSA?


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## POC (28 Apr 2017)

Daddy Ireland, what did you decide in the end?


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## Daddy Ireland (28 Apr 2017)

Nothing decided as yet.   We will need to talk to a broker on it all. But not going to Cornmarket on it.


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## spondulix (14 Oct 2017)

Hi all, thanks for this interesting thread. I'm in a similar situation to Daddy Ireland. My partner has joined the public service and is on the Single Pension Scheme. Figuring out how this scheme works is a bit of a head spinner and I don't quite understand it yet.

My partner also has a PRSA (thanks to LABrokers) to which she has been contributing before joining the PS.

She'll keep the PRSA contributions going if it's worth it from a tax perspective.

I would like to clarify:

She pays X% of her salary into the Single Pension Scheme with the PS.

Is it possible for her to claim tax back on the other Y% of contributions she puts into her independently arranged PRSA? Up to 20% as she is < 40?


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## Conan (14 Oct 2017)

if her only income is from the public service she cannot continue with a stand-alone PRSA. She can establish an AVC (even a PRSA AVC) up to a total of 20%.


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## spondulix (14 Oct 2017)

Conan said:


> if her only income is from the public service she cannot continue with a stand-alone PRSA. She can establish an AVC (even a PRSA AVC) up to a total of 20%.



What I'm really wondering is, can she keep her current PRSA and just treat contributions to it as AVC's for tax purposes, or must she create a new pension plan entirely to make AVC's to bring her up to the 20%?


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## Conan (14 Oct 2017)

It has to be a specific AVC PRSA, linked to the public sector pension. So  a new AVC PRSA.


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## spondulix (15 Oct 2017)

Conan said:


> It has to be a specific AVC PRSA, linked to the public sector pension. So  a new AVC PRSA.



I understand now, thanks. We'll have to do something about her current PRSA then.

After googling for a bit I've found some _AVC PRSA's_ which would be appropriate. This has helped explain a lot, cheers!


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## STEINER (15 Oct 2017)

Daddy Ireland said:


> Sorry I should have added that my wife would intend retiring at 60 so the contributions would be for approx 5 years x 18k per annum so very short term but worth it for the tax relief and taking of the 25% tax free at age 60.



the original post is a few months old but just as an aside on the retiring at 60 element (having some pension income from the SSPS), I don't think the new "Single Scheme" allows retirement at aged 60 on normal grounds.  Older schemes are 60 to 65 apart from prison officers, gardai etc.  The SSPS retirement dates specify min retirement age 65 to 70 max, and this window is even shorter depending on birth.


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## spondulix (29 May 2018)

Hi, one other question related to all of the above!

This thread has been valuable and bought a lot of clarity to my partner's situation.

We had settled on a PRSA AVC so she can make additional, tax-efficient contributions.

We've since discovered the (perhaps irrelevant) idea of 'Notional Service Purchases'.

Does anyone know if this NSP concept applies to the Single Pension Scheme or not?


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## Early Riser (29 May 2018)

Not allowed - as of yet, at least. See Note 1:

https://www.education.ie/en/Educati...nsions/Teaching-Staff/Notional-Service-Scheme.

Also this from the Single PS Scheme  Information Booklet:

_Can I pay extra contributions?

The option to purchase additional retirement benefits within the Single Scheme is not 
available at the moment. However, depending on your circumstances, you may be able to make 
additional voluntary contributions to separate Revenue-approved pension arrangements (e.g. an 
AVC Personal Retirement Savings Account or a trade union-affiliated AVC Scheme) if you wish to 
independently increase your retirement benefits outside of the Single Scheme.

As your employer cannot provide you with financial advice, you should seek financial advice 
independently._


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## niceoneted (22 Sep 2018)

POC said:


> I rang Cornmarket a few weeks ago. I was told the AMC is 1.75%, the contribution charge is 5% initially but averages out at 3.75% on maturity. There also is a fee of €450 to meet their consultant.
> 
> Needless to say, I will continue to look into other options.


POC did you have any luck finding a better deal on where to go?


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## POC (22 Sep 2018)

The Cornmarket charges went down, so I went with them.
2% regular premium charge. 1% annual management charge.


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## Protocol (22 Sep 2018)

You can get a Zurich PRSA-AVC with the following costs:

0% contribution fee
zero up-front fees
100% allocation rate
1% AMC


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