Lump sum drawdown amount allowed with a DB pension, and a PRSA from separate employment

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DualPublicPriva

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Perhaps experts here could help me understand how much lump sum drawdown amounts are allowed with a DB pension, alongside a PRSA from a separate employment?

Say for example, my DB pension entitled me to take x1.5 final salary (150k). Could I maximise the amount in the separate PRSA, in order to drawdown an additional 50k tax free lump sum, and an additional 300k lump sum at 20% tax?

Also, would it matter which of the two pensions (DB v PRSA) was drawn down first, in terms of lump sum amounts allowed?
 
There are specific rules governing dual incomes. Your post and username suggest that you have public sector and private income and that your public sector income is €100,000. As such, will only receive tax relief on PRSA contributions based on a private income of €15,000.

The maximum lump sum you can take from a private income PRSA is 25% of the fund value. In the example you give above, your PRSA would need to be valued at €200,000 in order to take a tax-free lump sum of €50,000.
 
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Yes I have both a public (DB) and a private (PRSA) pension from two separate employments. The public salary is approx 100k, leading to max 150k lump sum. So yes, to max out the private lump sum, I would need a private pension pot of €1.4 million, in order to take 25% as a lump sum (50k tax free, and 300k at 20% tax). I will hopefully be able make large employer contributions into the private PRSA to reach that pension pot amount in time.

I was mainly wondering is it allowable to take two lump sums from two separate pensions? And if it is allowable, does it matter in which order the pensions are drawn down?
 
DualPublicPriva said:
Yes I have both a public (DB) and a private (PRSA) pension from two separate employments. The public salary is approx 100k, leading to max 150k lump sum. So yes, to max out the private lump sum, I would need a private pension pot of €1.4 million, in order to take 25% as a lump sum (50k tax free, and 300k at 20% tax). I will hopefully be able make large employer contributions into the private PRSA to reach that pension pot amount in time.

I was mainly wondering is it allowable to take two lump sums from two separate pensions? And if it is allowable, does it matter in which order the pensions are drawn down?
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To max out the 150k lump sum, you need an AVC fund of 50k.
 
You need to put the existing pensions in order i.e. are the DB and PRSA previous schemes from previous employers and are you now a company director considering using the existing PRSA to add company money to or are you starting a new one?

Yes, on the two lump sums from separate pensions and the order doesn't matter as the tax on the excess over the €200K is on the cumulative. Pages 9/10 of this claim form will give you an indication of what's required on maturity.

Gerard

www.prsa.ie
 
Fortune said:
To max out the 150k lump sum, you need an AVC fund of 50k.
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Do you mean an AVC fund of 50k to bring the public service lump sum to 200k? Is that allowed? I thought the public sector lump sum is capped at 1.5 times final salary, whether solely through DB or with the added help of an AVC?
 
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GSheehy said:
You need to put the existing pensions in order i.e. are the DB and PRSA previous schemes from previous employers and are you now a company director considering using the existing PRSA to add company money to or are you starting a new one?

Yes, on the two lump sums from separate pensions and the order doesn't matter as the tax on the excess over the €200K is on the cumulative. Pages 9/10 of this claim form will give you an indication of what's required on maturity.

Gerard

www.prsa.ie
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The public service DB was started in 2011, and I then started the private PRSA as a company director in 2023 (it is all employer contributions that are going into the PRSA). I am 39 years old, and I continue to be employed in both roles. I am hoping to retire from both at around age 57 and max out the SFT.

So if I draw down the DB first (with say a 150k lump sum tax free), it sounds like it would be ok to then subsequently draw down the separate PRSA lump sum of 50k tax free and 300k at 20% tax?

Alternatively, would it be also be ok the other way around? Say if I draw down a 350k lump sum from PRSA first (200k tax free, plus 150k at 20% tax)? Would I then pay 20% tax on the public sector "tax free" lump sum of 150k, or is this allowed?
 
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Dave Vanian said:
There are specific rules governing dual incomes. Your post and username suggest that you have public sector and private income and that your public sector income is €100,000. As such, will only receive tax relief on PRSA contributions based on a private income of €15,000.

The maximum lump sum you can take from a private income PRSA is 25% of the fund value. In the example you give above, your PRSA would need to be valued at €200,000 in order to take a tax-free lump sum of €50,000.
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What are the specific rules governing dual incomes? This is what I am wondering about.
 
DualPublicPriva said:
Do you mean an AVC fund of 50k to bring the public service lump sum to 200k? Is that allowed? I thought the public sector lump sum is capped at 1.5 times final salary, whether solely through DB or with the added help of an AVC?
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Sorry, I misread your post. Ignore what I said
 
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