Irish Life AVC through Marsh V's PRSA AVC's and Revenue Clarification

LucanMan said:

So will you be better off paying the fleecing Marsh charge of extra 5% and investing in an Irish Life fund of your choice OR in capital protection fund now and then switching to a good Higher risk fund with higher growth long term (without any charge for the switch later).

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Not entirely true. There is an Market Value Adjustment (MVA) fee you will be charged for a fund switch which is a percentage of your total fund. Tread Carefully.

willbee said:

Not entirely true. There is an Market Value Adjustment (MVA) fee you will be charged for a fund switch which is a percentage of your total fund. Tread Carefully.

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Fully agree on this oversight. That is true if the value of your fund has gone down signifcantly and the Fund manager has announced a MVA fee (applies in a current downturn).

For example the Irish Life Secure performance fund (SPF) did not have any penalty of a switch 2 years ago during the good market days but now has a -15% MVA fund value if yo have to switch out of SPF.

Re: AVC PRSAs

RAIPI said:

So called 'stand alone' PRSAs are legally founded on sand ..it was a Revenue interpretation and an odd one at that!


I’ll declare an interest, I’m a financial advisors who specialises in pensions. I would not agree with the suggestion about something being not legally sound with the legislation establishing with PRSA AVC’s. I've heard this one before and it usually started by competing AVC providers to muddy the waters on the new PRSA AVC options.

The Dept of Finance website clearly set out the changes to new AVC legislation below in the 2001 Finance Bill. I pasted the link above. When this was announced in 2001 Revenue sought clarification from Dept of Finance on a number of points that not unusual when new Legislation is presented.

http://www.finance.gov.ie/viewdoc.asp=1303&StartDate=01+January+2008

Quoted directly from the 2001 Finance Bill

“Employees in an occupational pension scheme may use a PRSA as an ‘AVC’ vehicle, in other words, additional voluntary contributions may be made to a PRSA. The 15% limit that currently applies to the total of employee contributions to an occupational pension scheme and an AVC scheme will similarly apply to the aggregate of contributions to the occupational scheme and the ‘PRSA-AVC’. Such employees also benefit from the ‘tax-free’ employer contribution to the occupational pension scheme which is only limited by funding requirements.”

Please note the old funding limit of 15% of salary was mentioned that changed later and higher limits now apply depending on your age.

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