Employee scheme and AVCs to PRSA

M

MichaelR

Registered User
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25
Hello,

What are the rules about making AVCs to a PRSA when one has an employee scheme at work and no other income?

Different websites seem to have different views on the matter. The official Revenue manual at https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-24.pdf says:

"An individual who is a member of a pension scheme may only get tax relief in respect of a PRSA which is linked to that scheme. A PRSA which is used as an AVC is treated in 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."

Does this mean that the "PRSA which is used as an AVC" must be "linked to the pension scheme"? This seems to be the meaning but maybe I'm misreading this.
 
When you are completing an AVC PRSA application you're asked for details of the main scheme so that the product provider can do a max funding check to ensure you're not overfunding. The PRSA AVC and Occupational Pension Scheme (OPS) are forever linked as they must be matured at the same time.
 
Thanks! So one more question on this one.

If I have this kind of PRSA AVC account, what needs to happen for a one-off "special contribution" to be done for the previous tax year? Does this have to be expressly noted by the PRSA provider company, or do I just need to keep records that it is indeed a single contribution done in the expected timeframe?
 
PRSA providers don't backdate contributions. The date they receive the money is the date that's on the PRSA2 Certificate. You upload that certificate to the previous tax year via My Account or you send it to Revenue in advance of 31/10 and tell them you're electing to backdate it to 2023. If the broker you're using isn't giving you this information, find a different one.
 
GSheehy said:
PRSA providers don't backdate contributions. The date they receive the money is the date that's on the PRSA2 Certificate. You upload that certificate to the previous tax year via My Account or you send it to Revenue in advance of 31/10 and tell them you're electing to backdate it to 2023. If the broker you're using isn't giving you this information, find a different one.
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Just a related question. If you send the certificate via My Account I assume you also need to amend your previous year return on My Account and submit by 31/10 ?
 
Hi, I am a member of an occupational pension scheme, Im looking to diversify my investments as I feel the fund options in my occupational pension scheme are quite limited so can I just clarify that if I use net salary of the employments attached to the existing occupational pension scheme to pay an AVC the money must hit a PRSA AVC type structure which is attached to the occupational pension scheme in order to qualify for additional pension contribution tax relief?

In other words if I use the net salary to max my AVC contributions by payment into an independently set up PRSA product then these AVC payments into that independent PRSA do not qualify for a tax deduction?
 
Hayman said:
Hi, I am a member of an occupational pension scheme, Im looking to diversify my investments as I feel the fund options in my occupational pension scheme are quite limited so can I just clarify that if I use net salary of the employments attached to the existing occupational pension scheme to pay an AVC the money must hit a PRSA AVC type structure which is attached to the occupational pension scheme in order to qualify for additional pension contribution tax relief?

In other words if I use the net salary to max my AVC contributions by payment into an independently set up PRSA product then these AVC payments into that independent PRSA do not qualify for a tax deduction?
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Tax rebates may need to be applied for outside of payroll through revenue in your annual return ahead of the 31Oct of the following year. They absolutely qualify by you may need to apply for yourself. Not sure if you can set up your own occupational AVC fund linked to your employment. Does your employer have an alternative AVC fund ?
 
Hayman said:
I feel the fund options in my occupational pension scheme are quite limited
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I would be surprised if (m)any occupational schemes didn't offer a reasonable range of funds with different risk/reward profiles and asset mixes. What funds are on offer? Maybe it's not actually necessary to go the AVC route?
 
You can set up your own AVC PRSA.
This can be done without any input from your employer. It has to be associated with your employment scheme only in respect of the rules of the employment scheme.

Any funds from your employment up to the maximum of your age related tax free % yearly allowance minus what you have paid to the employment scheme will be tax free.

Other than that you can operate it independently. Your employer would have no knowledge of it's existence.

At retirement details of your employment scheme would be sent to the AVC provider to calculate any tax free lump sum that you might be entitled to.
 
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ClubMan said:
I would be surprised if (m)any occupational schemes didn't offer a reasonable range of funds with different risk/reward profiles and asset mixes. What funds are on offer? Maybe it's not actually necessary to go the AVC route?
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New World Indexed All Country Equity FundILIM57.57%
Emerging Market FundILIM15.68%
Multi Asset Fund NILIM14.97%
Towers Watson Global Equity Focus FundTW11.67%
Pension Cash Fund S5ILIM0.11%
Annuity Objective Fund .ILIM0.00%
INDEXED EQUITY PARTIAL HEDGEILIM0.00%

this is the offering and the spread...it appears quite limited to providers and fund type....
 
S class said:
You can set up your own AVC PRSA.
This can be done without any input from your employer. It has to be associated with your employment scheme only in respect of the rules of the employment scheme.

Any funds from your employment up to the maximum of your age related tax free % yearly allowance minus what you have paid to the employment scheme will be tax free.

Other than that you can operate it independently. Your employer would have no knowledge of it's existence.

At retirement details of your employment scheme would be sent to the AVC provider to calculate any tax free lump sum that you might be entitled to.
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Thanks for the reply, that was my understanding otherwise how can you avail of other PRSA fund offerings in your are on a single employment income .

It has to be associated with your employment scheme only in respect of the rules of the employment scheme. - sorry can you explain what you mean here please?

When going to set up this new independent PRSA I was advised by the rep that AVCs have to follow the occupational scheme if you are correctly claiming relief as a tax deduction for those AVCs. The occupational scheme is designated and so its the only option to pay AVCs into with income from the related employment.
 
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The first and fourth look like most/all equity funds that might suit most pension savers, but I haven't looked into the details. Pity there's no all equity index trackers as far a I can see though.
 
ClubMan said:
The first and fourth look like most/all equity funds that might suit most pension savers, but I haven't looked into the details. Pity there's no all equity index trackers as far a I can see though.
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Flybytheseat said:
Tax rebates may need to be applied for outside of payroll through revenue in your annual return ahead of the 31Oct of the following year. They absolutely qualify by you may need to apply for yourself. Not sure if you can set up your own occupational AVC fund linked to your employment. Does your employer have an alternative AVC fund ?
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Thanks, no employer does not have and alternative AVC fund
 
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