New entrant Pension & AVC

[fred123456]

Hi All,

Just trying to work out how much to put into an AVC. I plan on working until 66, fingers crossed and this will give me 21 years service.

@66 i will have 21 years service and the estimator tool puts my payment 51k lump sum and 13k pension + 13800k state pension.

Current Salary 80k

revenue say you can earn upto 200K tax free.

Am i right in saying the following

As civil servant i can retire on 1.5 times my salary so lets say 90K is my salary. if i had 40 years service this would equal 135K

However as i have only 21 years service this would be 51k

Now to the AVC's, is this correct.

135K - 51K = 84k is what i could put in.

So based on this am i right in saying that I should at a minimum try and put 84k into and AVC to max the tax free return of 135k over the next 16 years.


Kind Regards
Fred

 

[Opus2018]

Hi All,

Just trying to work out how much to put into an AVC. I plan on working until 66, fingers crossed and this will give me 21 years service.

@66 i will have 21 years service and the estimator tool puts my payment 51k lump sum and 13k pension + 13800k state pension.

Current Salary 80k

revenue say you can earn upto 200K tax free.

Am i right in saying the following

As civil servant i can retire on 1.5 times my salary so lets say 90K is my salary. if i had 40 years service this would equal 135K

However as i have only 21 years service this would be 51k

Now to the AVC's, is this correct.

135K - 51K = 84k is what i could put in.

So based on this am i right in saying that I should at a minimum try and put 84k into and AVC to max the tax free return of 135k over the next 16 years.


Kind Regards
Fred

Hi Fred,

The first thing is to set up an AVC and put in what you can afford, depending on your age (I'm assuming you're in your mid 40's). You will be able to take some of your AVC's as a lump sum but there might be a need to build up your service before you can do that - I'm not sure if it's 20 or 25
years (but this can be done via your AVC). You can check this point out further. Assuming you are in your mid 40's you can put up to 25% of your salary into an AVC (less your existing contributions, where you get tax relief at the marginal rate. Basically, the idea should be to build a pot up so that you max the lump sum and have other AVCs available to withdraw at 4% (via a PRSA) or use the remaining cash to buy an annuity etc.,

Based on where you are you can have 150% of final salary (maybe in your case average salary, but if you came in at 80k then it's not so much of an issue) and this can be tax free. Your pension is then taxed as income at the appropriate rate.

One other thing don't go to Cornmarket under ANY circumstances. Their charges are outrageous. You would be far better off going to Irish Life etc. There are a number of contributors here that are pension advisors e.g. Liam Ferguson but you can shop around.

Hope this helps but let me know if you need anything further,

Opus2018