Could an AVC come back to haunt me?

I know this is a crystal ball question, but I'd still be interested in some informed views on the matter. I'm current investing in an AVC, in my attempt to be responsible and prudent in providing for my retirement in 20/25 years time.

However, I sometimes wonder if at the end of this time I may be 'punished' for having self provided for this additional income. Is it feasible, that in the future, I could be told, no you can't have a medical card/other benefits because of your AVC income. A medical card in particular could be invaluable and far outweigh the income from my AVC, which would be quite ironic, not to mention very frustrating.

As I say, I know it's very hard/impossible to predict pension/medical card arrangements/threshold so far into the future, but a considered opinion would be welcome.

Hard question to answer, my crystal ball is on the blink.
The only thing that occurs to me is that you are always better off if you have stuff that is your own. They may tax and they may penalise, markets may dip and rise at the wrong times but the more of your own you have the more cushioned you are from this. Not a good answer but I can't seem to get the damn thing off X-Factor ... And I don't even like X-Factor!

Do you want financial independence and the live the life you want?

Or do you want to rely on the state to provide for you?




Steven
www.bluewaterfp.ie

It's possible that some services that are not currently means-tested will become means-tested into the future. But it would be highly unlikely that a means test would distinguish between AVCs and any other assets. So even if you stopped the AVCs, but continued to accumulate these savings in some other form, e.g. a less tax-efficient post office account, then the fact of having these post office savings would still count against you in a future means test. So you'd have to stop the AVCs and spend the money now to avoid this. It doesn't seem prudent to me to start spending money on "stuff" now purely to stay within a means test at some point in the future, that doesn't exist right now and might never exist.

Thanks for your thought on this hypothetical scenario. The hope I have is that it really would be contradictory for the Government to incentivise pensions, and then hit those availing of them with a penalty for doing so. Having said that, we live in uncertain times, so you never know what the future may bring - who would have envisaged private pension being raided by the Government - a disgraceful decision, IMO.

The fear I have is that they would distinguish between savings as assets and ACV's as income, for means testing purposes. In the meantime I'll ignore the fear, and live with the hope, and continue 'doing the right thing'.