Decisions on Retirement

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dyle

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[FONT=Verdana, Arial, Helvetica, sans-serif]WHAT TO DO WITH AVCs[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]If you have made additional voluntary contributions to your pension scheme, you may have the following choices: [/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]Buy an increased annuity
Cash them now and pay income tax at your marginal rate
Put them in an Approved Retirement Fund[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]These are dealt with in more detail in the section ARF or Annuity ?[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]WHICH ANNUITY?[/FONT]
[FONT=Verdana, Arial, Helvetica, sans-serif]With a defined contribution pension scheme, you will have accumulated a pension fund on retirement.
You will be able to take a tax free lump sum of 150% of your final salary. [/FONT]

Can anyone define FINAL SALARY ?
Is it your previous years P60 ?
 
With a defined pension scheme you can take a lump sum of 1.5 times salary

With a defined contribution scheme afaia, you can take up to 25 % of the value of the fund tax free.

Can anyone define FINAL SALARY ?
Is it your previous years P60 ?
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Generally it is your final P60 or an average of the previous 3 years. You can if memory serves me right go back 10 years in some circumstances
 
The max of 1.5 times final salary is for both DB and DC schemes, if however you are a 5% director plus you can access the finance act route of 25% tax free and the balance tax paid (subject to some conditions) Final salary for a non director has three calculations, however the general one is the average of three consecutive years total emoluments.
 
I will narrow the question down to a DB scheme. Lets assume that No lump sum is taken from the DB scheme itself but only from AVC contributions. How do I work out what 1.5 my final salary.
Would revenue take previous years P60 or take P60 for previous 3 years and average them. Assuming that final salary is based on P60 rather that you that your basic work salary which would not include overtime etc. P60 will include everything including basic salary, overtime and BIK etc. The reason I ask this question is that it not clear in the section on "Decisions on Retirement". Also it was not clear on Revenue website.

Which is correct if any
Previous years P60
or
P60 for previous 3 yeras and average them.
 
One point to note: your P60 total is your gross earnings less any occupatiobnal pension contributions.

P60 total is not the same as final salary.
 
Lets assume that No lump sum is taken from the DB scheme itself but only from AVC contributions. How do I work out what 1.5 my final salary.
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Afaia, in order to qualify for the 1.5 times lump sum payment you must have at least 20 years service and reached NRA. A smaller lump sum is payable if you do not satisfy these conditions.
It is up to the rules of your scheme to decide what qualifies as final salary for lump sum payments. Generally it is your actual gross salary on the date you retire (if paid monthly multiply by 12). If you are paid a lot of overtime, commission etc you need to check the rules of the scheme with the trustees.
Any excess from your AVC fund can be used to increase you pension.
If a deficit (your AVC fund is less than your lump sum entitlement nornally 1.5 salary) you can just take the AVC amount and leave you pension as is or you can commute part of your pension.

Generally it is your final P60 or an average of the previous 3 years. You can if memory serves me right go back 10 years in some circumstances
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In order to avoid confusion here the P60 figure (plus any occupational pension contributions) is used to calc the max pension allowed by revenue. It is not used to calculate the lump sum.
 
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