Can an AVC PRSA be split in two?

Hello,

I have already asked this question in this thread and in this thread. They were other peoples threads and I never got an answer either so I am asking it here again in my own thread. If no one knows the answer and I eventually find out the answer I will update this thread as I think it would be helpful for people to know this information.

I have contacted Revenue, my local Pension Office (twice) and Cornmarket (twice) weeks ago and none have gotten back to me. I have also emailed the Single Pension Scheme "helpline" but they don't know.

I am a member of the HSE Single Pension Scheme. I won't have 40 years service by the time I retire. I am about to start paying AVCs and hope to do that for the next 20+ years.

Regarding the option to purchase additional referable amounts (Pension benefits), not with cash but by way of transfer, subject to the rules in this circular.

The Circular states:

"All transfer values relating to a previous employment, PRSA or BoB/PRB must always be included in the purchase of referable amounts by way of transfer. No split transfers are permitted. For this reason, Scheme members should be aware that in cases where the transfer value exceeds the cost of purchasing the maximum amount of pension/lump sum referable amounts permitted for the individual member under this Circular, this would result in the balance of the transfer value being lost to the member."

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Let's say as an example by the time I get to retirement age I have 500,000 in my AVC PRSA and I want to purchase by way of transfer 300,000 worth of referable amounts is there no way for me to not forfeit 200,000 from my pension fund? Could I first siphon off 300,000 from my AVC PRSA in to another PRSA purely for the purpose of purchasing 300,000 worth of referable amounts, by way of transferring that PRSA in its entirety, such that in doing so I would not forfeit any remainder in my main AVC PRSA... this amount (200,000 in this example) I would aim to transfer to an ARF.

I would like to know is this possible and would I need to pay any taxes in the process? My aim would be to do all this at the time of my retirement, hopefully not incurring any tax liability in the process.

In his great thread: "The Single Public Service Pension Scheme" @Ent319 states:

"You can't split your main AVC to part-fund purchases through the facility . If you wanted to keep your options open about buying from the purchase facility you could set up a separate, more modest PRSA-AVC separate to your main AVC and transfer this in later on in your career, if it was worth it at that point."

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I don't want to do it that way. That will be too much hassle having to keep an eye on the value of one fund and trying to judge how much to keep contributing to that then endlessly checking to see will it grow to just the right amount but not by too much either because I might have to forfeit the excess.

One useful help I got was from the Pensions Authority who confirmed that you can transfer benefits from one PRSA to another but my question is specifically can I transfer only a portion of one AVC PRSA in to another PRSA. To split it in other words, in to two funds, and only to satisfy the rules outlined in the Circular above whilst not forfeiting any of my retirement fund. The Pensions Authority suggested I read Chapter 24 of the Revenue Pensions Manual, Personal Retirement Savings Accounts. From my initial read it isn't clear if splitting an AVC PRSA is allowed.

Any help would be much appreciated. Thank you.

Did you find out from your employer what the eligibility details for purchase? Did you ask them if there were any restrictions on the amount you could pay in one year (the year that you choose to retire) to purchase the referable amounts? Did you ask, for example from your example, what €300,000 would buy you in the actual year you want to retire? Are the purchase amounts salary based?

I can't see why a product provider would have any issue with splitting an AVC PRSA but the control of what you can/can't do would be with employer.

I've said it before but, this scheme is actuarially based, it's highly unlikely that it would be a financial 'no brainer' that would put you in a much better position than would, say, purchasing an annuity on the open market on a retirement date of your choosing. Remember, if you put the €500k into an ARF, you can always buy an annuity with part of that value when you're older and annuity rates might be more attractive.

Gerard

www.execution-only.ie