Hi Bondgirl,
Am I understanding you correctly? You want to make AVCs to a pension fund but you specifically want to use these AVCs towards getting a lump sum at retirement, as distinct from increasing your pension?
If so, there are limits as to how much you can contribute. Your DB scheme already will provide you with a lump sum at retirement, quite possibly 1.5 years' final
pensionable salary. Revenue maximum tax-free lump sum is 1.5 years' your final
actual salary. You'd need to check with HR or your DB scheme booklet as to what your
pensionable salary is for the purpose of the DB scheme.
In many cases, your actual salary may be higher than your pensionable salary. For example, your pensionable salary probably doesn't include any overtime, bonuses etc. Your pensionable salary may well be your basic salary, less a multiple of the State pension.
If there's a gap between your actual salary and your pensionable salary, you can bridge it using AVCs.
Example - you earn €50,000 per year including overtime.
You find out that your pensionable salary is €40,000 per year.
Scheme will give you €40,000 x 1.5 as a tax-free lump sum = €60,000
Revenue will allow €50,000 x 1.5 = €75,000
You can make contributions to an AVC to fund the €15,000 gap. You can make assumptions as to what your salary in 30 years' time will be, including inflation.
I'm assuming above that you will have maximum service in the DB scheme at retirement. If not, and you've already bought back all the extra years you can, you can bridge any gap with AVCs.
Hope this helps.
Liam D. Ferguson
www.ferga.com