Definition of net relevant earnings for AVC

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Protocol

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Main employment = public servant on 50k
Employee is a member of the main PS pension scheme

Person does other work for another State agency, earns wages, assume = 5k

Can the worker do an AVC based on the combined 55k wage income?

Or is the AVC related only to the wages from the main employment = 50k?

Thanks.
 
AVC's are only in relation to the income earned from the employer that has the pension scheme. The additional €5k can't be included when calculating the amount that can go into an AVC.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Really, what I am asking is:

are the 5k wages from the second employment AVC-able?

S class states that they are.
 
On this topic, does earned income mean the amount they get paid at each salary date or can the value of a package be used. For eg, value of car, health ins etc?

Thank you
 
phoenix53 said:
On this topic, does earned income mean the amount they get paid at each salary date or can the value of a package be used. For eg, value of car, health ins etc?

Thank you
Click to expand...
Earned income is the gross yearly income including salary/wages, overtime, bonuses, allowances etc and any BIK such as company car, employer paid health insurance etc.
Basically any income that's taxable is potentially pensionable. But remember that there is a limit to how much Employee contributions can be allowed for tax relief purposes- the % limit up to an income limit of €115,000.
 
Conan said:
Earned income is the gross yearly income including salary/wages, overtime, bonuses, allowances etc and any BIK such as company car, employer paid health insurance etc.
Basically any income that's taxable is potentially pensionable. But remember that there is a limit to how much Employee contributions can be allowed for tax relief purposes- the % limit up to an income limit of €115,000.
Click to expand...
"The 1% limit up to an income limit of €115,000...."


@Conan if you happen to pop in again, can you re-explain... (Probably really obvious but my brain is not getting it...)

Say, if setting up an AVC in 2024 and salary is €70,000, what is the limit you can put into an AVC to get tax relief?

If in 2025, salary goes up to €75,000.. what happens then?

How can one figure out, how NOT to go over the tax relief beneficial threshold?
 

Limits set by Revenue based on your age - https://www.revenue.ie/en/jobs-and-pensions/pension/relief/tax-relief-limits.aspx​

Age-related earnings percentage limits​

You can get tax relief up to the relevant age-related percentage limit of your earnings in any year.

You might have more than one source of income. If you do, this relief is only from the source of income in respect of which the contributions are made.

Age-related percentage limit for tax relief on pension contributions
AgePercentage limit
Under 3015%
30-3920%
40-4925%
50-5430%
55-5935%
60 or over40%
For example, an employee who is aged 42 earns €40,000 per year. They can get tax relief on annual pension contributions up to €10,000.

Total earnings limit​

The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.

Employer contributions to an employee's scheme are not taken into consideration when calculating the employee's earnings threshold.
 
Redzer said:

Limits set by Revenue based on your age - https://www.revenue.ie/en/jobs-and-pensions/pension/relief/tax-relief-limits.aspx​

Age-related earnings percentage limits​

You can get tax relief up to the relevant age-related percentage limit of your earnings in any year.

You might have more than one source of income. If you do, this relief is only from the source of income in respect of which the contributions are made.

Age-related percentage limit for tax relief on pension contributions
AgePercentage limit
Under 3015%
30-3920%
40-4925%
50-5430%
55-5935%
60 or over40%
For example, an employee who is aged 42 earns €40,000 per year. They can get tax relief on annual pension contributions up to €10,000.

Total earnings limit​

The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.

Employer contributions to an employee's scheme are not taken into consideration when calculating the employee's earnings threshold.
Click to expand...
@Redzer Thank you.
That helped to fill in the blanks for me.

If you (or others) happen to have a link/thread that explains:

- how to figure out shortfall the maximum AVC shortfall that would benefit pension, before taxed after 65 years.

- how to know what executive only AVC to do? (Zurich - Prisma etc)

- is there any negative impact of doing lump sum AVC before Oct 31st (49 now, 50 on Oct 24th)
 
ACER10 said:
- is there any negative impact of doing lump sum AVC before Oct 31st (49 now, 50 on Oct 24th)
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I think if you're 50 this year that means you can put in 30% for 2024 - it doesn't matter when in the year you turn 50.
However as far as I know you can put that 2024 lump sum in at anytime until Oct 2025.

It's the 2023 lump sum that needs to be done before Oct 2024 - that one is still limited to 25% in your case.
 
ACER10 said:
@Redzer Thank you.
That helped to fill in the blanks for me.

If you (or others) happen to have a link/thread that explains:

- how to figure out shortfall the maximum AVC shortfall that would benefit pension, before taxed after 65 years.

- how to know what executive only AVC to do? (Zurich - Prisma etc)

- is there any negative impact of doing lump sum AVC before Oct 31st (49 now, 50 on Oct 24th)
Click to expand...
- Not too sure what you mean by the first point above? Put in as much as you can afford up to the % age limits. Its difficult to answer specifically without knowing how much you've already contributed (shortfall?) and how much of a lump sum you have available (€1k, €10k, €100k?).

- Research the AVC PRSA products and find a Provider and product range that suits your investment appetite. Contact LA Brokers (or others) as per https://www.askaboutmoney.com/threa...-enough-to-do-execution-only-prsa-avc.236281/ thread. I would suggest that you don't sweat too much about the exact product as its more about how much you put in, at what risk level and how long you leave it for rather than other variables. I personally would go for a Global Indexed Equity Fund if you're looking at a several+ year horizon.

- No specific negative impact but generally the longer you're in the market, the better. If you haven't already maxed out your 25% age limit contribution on your 2023 pension contribution then you could put in a lump sum ASAP specifying it as part of your 2023 contribution and claim back the tax element. You could then also use that 2023 tax refund to put in another lump sum ASAP specifying it as part of your 30% limit 2024 contribution (or even as another 2023 contribution if still below 25%!) provided you are below the % age limits.
 
Protocol said:
Main employment = public servant on 50k
Employee is a member of the main PS pension scheme

Person does other work for another State agency, earns wages, assume = 5k

Can the worker do an AVC based on the combined 55k wage income?

Or is the AVC related only to the wages from the main employment = 50k?

Thanks.
Click to expand...
I came across this document from a Pensions Authority Judgement.
It is about a situation where a retiree teacher was getting advice about a last minute AVC.
The complaint was about 'lots of things' but one area was whether work as Examiner should be counted in final salary:
Examiner work (orals, practical exams, LCA interviews etc) and
Superintendent work (LC and JC final exams) is paid through the SEC (State Examinations Commission).

It is taxable...
Judgement said 'no', although retiree received Compensation on other grounds I didn't understand exactly.
 

Attachments

  • DOC-20240619-WA0009. (1).pdf
    835.5 KB · Views: 8
The AVC element on the non pensionable earnings in that judgement didn't seem to be permitted by Revenue?

"In relation to her non pensionable earnings, the Respondent states that these earnings cannot be used in the calculation of scope for a last minute AVC against her employer gratuity. It has furnished correspondence between the pension provider and Revenue in support of that contention."

"The Respondent has furnished email exchanges between Revenue and the policy provider which confirm that the Complainant’s earnings from correcting exams for the State Examinations Commission, cannot be used for the purposes of her own Department of Education and Science pension scheme."

I had a quick google and found this document (https://www.cornmarket.ie/uploads/13292_AVC_Scheme_Member_SQ_Booklet_08-18_REBRANDED_FA_WEB.pdf) from Cornmarket which notes that "When determining your maximum retirement benefits, Revenue includes your non-pensionable earnings such as overtime"

It might be worth clarifying this with Cornmarket (even though you may end up setting up your own separate AVC PRSA after). It won't hurt to ask.
 
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