Contributions to more than one pension product

T

TooMuchTax

Registered User
Messages
4
Hi all, I am mid forties, earning over 115k per year. I am PAYE and member of occupational pension scheme. I contribute a percentage of income monthly to the pension scheme and in the past have topped up with AVCs to the max 25% of 115k (28.75k euro), into the same scheme.

This year, I had a plan to open a Davy's AVC PRSA and pay my AVCs in there. I want to have more control over the AVC portion rather than the very limited options in the occupational scheme. This would have to be done outside payroll and I would have to claim tax relief on the contribution. I had assumed that as long as my aggregate contribution was less than or equal to 28.75k, that this would be OK.

However, reading the revenue website, if I read it correctly, this is not possible. They consider that I have used up my earnings limit through my contributions to to the occupational scheme. Even though, I have not maximised the contributions, their view is that I have contributed and earned up to the 115k limit.

Has anyone familiarity with this situation. Am I reading this correctly? Many thanks,
 
I think you may be misinterpreting something on the Revenue website as what you propose to do is entirely permissible. I'm assuming that you're not in any danger of exceeding any of the upper limits on fund size at retirement, e.g. €2 million in total or a pension of 2/3 your final salary if you have full service.
 
Hi LD,

Thanks for getting back so quickly. No, I am not exceeding limits on fund size.

On the revenue website, in the pensions handbook, section 26.4, particularly Example 2 seems to show a similar case. Albeit in this case, the Example has multiple sources of income. In my case, I want to make a lump sum contribution from savings. I can't post a link, but if you search "Chapter 26" on the web-site and look at section 26.4. Thank you!
 
That section is only for people with more than one source of income. If you have both PAYE income and private income and are in an Occupational Pension Scheme in respect of your PAYE income then you must "max out" your contributions to the pension scheme before seeing if there's any scope to make further contributions in respect of private income. If your PAYE income is itself >€115,000 then you won't have scope to make private pension contributions.

This doesn't apply to you from what you write.

Regards, Liam
 
Liam, one final question if I may. In Section 24 of the Pension Manual, it states:

An individual who is a member of a pension scheme, may only get tax relief in
respect of a PRSA which is linked to the pension scheme. A PRSA which is used
as an AVC is treated in exactly the same manner as any other AVC. The total
pension and PRSA contributions must be limited to the amount required to
provide maximum benefits as set out in Chapter 6.

As mentioned in original post, my intention is to contribute to a Davy self managed PRSA AVC which is not linked to my occupational scheme. Still OK?

Thanks again,
 
TooMuchTax said:
A PRSA which is used as an AVC is treated in exactly the same manner as any other AVC.
Click to expand...

That's the key line. Your Davy AVC PRSA will just replace your current AVC. As long as you, your advisor and/or Davy make sure that your Davy pension is documented as an AVC PRSA and not just an "ordinary" PRSA, it should be fine.
 
You must log in or register to reply here.
Back
Top