AVC query
- Thread starter Grueler
- Start date
Steven Barrett
Registered User
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That is too vague a question. What amounts are we talking about and what investment term are you talking about?
Steven Barrett
Registered User
- Messages
- 5,277
By putting more into your pension you get a lower lump sum??
I'm taking a punt here that with 1% normal contribution you're in a defined benefit scheme. The tax free lump sum is calculated as a % of final salary based on years service (max of 150% of final salary). This option is available to defined contribution too. In a lot of cases, the scheme salary definition is different to the Revenue one, meaning that there is scope to boost the lump sum at retirement through AVC's.
The other option under defined contribution schemes is to take 25% of the fund tax-free and invest the remainder in an ARF.
I can't understand how having AVC's can reduce your lump sum.
Steven
www.bluewaterfp.ie
I'm taking a punt here that with 1% normal contribution you're in a defined benefit scheme. The tax free lump sum is calculated as a % of final salary based on years service (max of 150% of final salary). This option is available to defined contribution too. In a lot of cases, the scheme salary definition is different to the Revenue one, meaning that there is scope to boost the lump sum at retirement through AVC's.
The other option under defined contribution schemes is to take 25% of the fund tax-free and invest the remainder in an ARF.
I can't understand how having AVC's can reduce your lump sum.
Steven
www.bluewaterfp.ie
Steven it is actually a defined contribution scheme, the idea of making 1%
normal contribution is that was all that was required to get maximum employer contribution of 8%. Anyway from what you say above I can take it that the percentage split bewteen normal and AVC's has no bearing on the final lump sum value. Thank you for your help.
normal contribution is that was all that was required to get maximum employer contribution of 8%. Anyway from what you say above I can take it that the percentage split bewteen normal and AVC's has no bearing on the final lump sum value. Thank you for your help.