AVCs for post 2013 teacher

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OEP1990

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I have gone through the various threads on this but I'm still confused. I just want some general guidance...

My wife is a teacher, post 2013, and hasn't a clue about pensions etc. so that falls on me (private sector). She'll be about 66 before she has 40 years done so the option for early retirement without losing too much pension would be nice. I also don't think the pension she will get is enough to lead the lifestyle I envisage for us in retirement.

My questions:
- AVCs seem to be the obvious option to me, but reading other threads it seems there are some things to think about?
- What's the general opinion on buying years instead?
- Or a mix of both?
- What about a PRSA?

I'm all for opinionated answers here.
 
While purchasing added years was once an attractive option (I did it myself), it is much less so nowadays, due the actuarial calculations having been tweaked. In its favour, it's a bird in the hand situation - you know what they cost, you pay for them and you know exactly what you're going to get from them when retirement time comes around. The AVC PRSA is less guaranteed but is much more flexible and, barring a complete disaster, will probably produce a better outcome.

Opinionated answer: For me, the AVC PRSA is the better option. Given the number of years to go before she'll be availing of the pension, you should probably consider selecting a mix of both medium and low risk funds.
 
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Buying back years is guaranteed and free of charges or investment risk. You know from Day One what you're to get in return for your money.

On the other side, AVCs are more flexible than buying years. You can use your AVC fund to just top up your tax-free lump sum at retirement and/or invest in an Approved Retirement Fund which allows you to be flexible about the income you withdraw. Buying back years always gets you extra lump sum and extra fixed pension.
 
Thank you for your input, and recommendation not to go with Cornmarket. AVCs were what I thought would be the best option and that's enough to confirm it for me. She will go with what I suggest and the associated risk with AVCs aren't an issue for me, I max out contributions to my own pension as it is.
 
Dave Vanian said:
You can use your AVC fund to just top up your tax-free lump sum at retirement and/or invest in an Approved Retirement Fund which allows you to be flexible about the income you withdraw.
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This is very important.

People should look beyond a pure cash comparison between national service and AVCs. AVCs carry more risk but may produce a better return if invested in an ARF. For many public servants I think this is no bad thing as their public service pension is very predictable.

A residual ARF also passes tax-free to a spouse if you pass away, whereas a spouse’s public service pension is 50%.
 
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