General PRSA/AVC Advice Required

[Itchy]

Hi folks. I was would appreciate your contribution to a number of my questions.

I am in my late 20's and considering starting a PRSA. I have DB public sector pension and was considering making AVC's in order to take advantage of the tax relief for 2011. I understand I can contribute up to 15% of my Net Relevant Earnings for 2011. Are my NRE my Gross pay as stated on my P60? And can I make a Lump Sum payment before October to take advantage of this?

I have a work AVC scheme but I feel the costs are expensive, 5% of each contribution for 30 odd years will be a big chunk. I like the alternative offered by the likes of Liam D. thats been on the site for years.

Will it be worth while to continue to contribute if the tax relief drops to 20% and is eventually eliminated, assuming I will be a higher rate tax payer when I retire?

Personally I am in a position of no debt or property and am unlikely to purchase in the next 3/4 years. I have 12/14 months Net Salary in Cash and understand the risks of not being able to access the funds untill retirement etc. I am basically weighing up my investment options and trying to come up with some sort of financial roadmap. Thanks for the help.

 

[Conan]

Assuming you are a member of the normal public service DB scheme with potentially close to 40 years service, I would ask why you want to invest AVCs at all. Would you not be better investing surplus funds more short term and accessable (AVCs would be locked away for 35+ years) and accumulating a deposit for a property at some stage.
I know you get tax relief/tax deferral on AVCs but who knows what tax rates will be in 35 years.
At a later satge you will be able to invest AVCs when you might have a better handle of your expected pension and other assets/liabilities.

 

[shigllgetcha]

The NRE you talk about is your gross pay not your P60 earnings. Your p60 pay is any taxable pay minus your pension contributions, the figure you want is your gross pay from your last payslip of 2011. Remember though your normal contributions are included in your 15%.

In your 20's i think youd be aswell off putting it on deposit. you might want access to your money in the future and god knows what would happen your investments between now and 65.

The % goes up as you get older so if you had alot of money on deposit you could move it over later in life.