SeaSwimmer
Registered User
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- 8
If you are no longer in that employment you can’t now make a pension contribution to reduce your 2019 liability. That contribution would have needed to have been made before you left that employment / your contract ceased.I'm looking to max out my 20% tax free pension contribution from my 2019 public sector salary before the end of October... As I'm currently not employed with the public sector, so I'm a bit confused as to what I can do.
I'm guessing that the return on dumping more cash into a public sector AVC (even if I can do this) on the single scheme is poor, and that a separate private PRSI could be better, and also offers me flexibility if I leave my job in the future?
You disagree and say that if I set up my own PRSA AVC, it will be linked to the single scheme anyway?
I'm 37 and due to many years living abroad in my 20s & 30s, I won't be eligible for a full state pension....
Ah thank you!When I say separate, I mean not organised by employer, or not sold by broker or pension firm linked to employer.
Sorry.
The PRSA AVC will be linked to that occupation, to that job.
I’m not 100% sure if there is anything in the TCA that categorically states this. There’s nothing obvious in S.787 that’s jumping out at me but I’ll do some digging for you.
Yes it’s somewhat unfair but it’s also potentially a substantial relief from Revenue’s perspective. It also affects self employed individuals who cross over to other PAYE employment and vice versa, where they do not make the contribution prior to the relevant trade or employment ceasing. I’ve seen relief granted where a sole trader becomes a LTD / trading company after the year of assessment, effectively still working in the same employment, but this is the only exception that I’ve seen.
To apply for an AVC PRSA you need to be a current member of an occupational pension scheme with relevant earnings. Also when submitting the tax relief claim for 2019 the ROS system will ask:
1: What employment the pension scheme relates to.
2: What contributions were made in 2019 & how much relief was provided at source (if applicable)
3: What contributions were made between the period January to 31st October of 2020.
Regarding point 1 above, it’s a drop down box. In your case (as you are currently not employed in the Public Sector) the single scheme for the relevant department may not appear here. Also on no.3 the ROS system will know your date of leaving service. You could try it but it does not guarantee that relief will be granted.
As I said, I’ll try to do some joining of the dots between the TCA & the Revenue Pensions manual to see if I can come up with a more “official” line on this for you.
Outside. I'm aWas this inside the EU or not?
It looks like it is possible to set up ( what I am told is a ) 'public sector PRSA for 2019, and then set up a Private Sector PRSA next year for my Private Sector earnings in 2019.I am not disagreeing. To set up the PRSA-AVC you shop around and find a broker to set up the AVC. Your employer does not have to know anything about this (and I doubt they would be interested). You pay your contributions via your bank account and arrange with Revenue to adjust your taxes accordingly. However, the scheme benefits are linked to the Single Scheme. You cannot draw down the benefits until you are drawing down the Single Scheme benefits. Or, should you take cost-neutral early retirement from the Single Scheme you have to take the benefits accrued through the AVC as well. You cannot transfer this PRSA-AVC to another employment in the private sector. However, you could transfer it if moving within the public service and remaining a Single Scheme member.
I don't know about setting it up now to take advantage of 2019 tax breaks. But what Smoneen says makes sense - given that you are not currently employed. As it seems like you are going to shop around for an AVC provider you might pose this question to some of them on the telephone. If it is possible, it would have to be done by the end of October.
Outside.
Then another company told me last week that there is a "mandatory" 5% contribution charge on all standard PRSAs (I asked them to clarify this as I was sure they were incorrect) and they told me I should take a non standard as its only 1.5% ann mgt charge. But I looked it up, and it's "max" 5% contribution charge.... So I think they outright lied to me? I'm wondering who I can trust with my life savings now tbh...
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