Public servant approaching retirement - maximising lump sum - implementation options

Say a public servant was a year from retirement and under the 3n/80ths regime was €10k shy of the Rev Max Lump Sum.

Math wise, it's a no-brainer - for a net cost of €6, one gets back the value of the €10k investment.

What are the minimum charges for investing this €10k?

[From another post, it looks like Cornmarket would cost about €1k between consulting fee and contribution and other charges. Has anyone found a better solution?!]

I know I'm not answering your question. If you're 65 or older, with respect I think you are a bit late in the day investing even if its just €10K. And I ain't great at advising a fellow public servant as my investments were not great. However, I had to do something rather than nothing. But, the truth of the situation is that if I had invested all that had been due to me through a qualified financial advisor I would have lost much more. OK! I'm getting something back month by month, but once my initial investment is recovered/near-recovered I'm cashing out.

Life is too short. Mrs Lep continues to work, but I'm 2 years retired. I intend continuing to enjoy my retirement and that of Mrs Lep when it happens. We've earned the few bob we have and that due to us and I have no intention of paying fees/commissions to some investor or even the potential of leaving our children argue over it.

I'm going to enjoy the rest of my days without worrying about cashflow or queuing up at some offal counter looking for a discount. I advise you to do the same.

Leper said:

respect I think you are a bit late in the day investing even if its just €10K

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I think you missed the point of the question.

They're not looking for a long term risky investment, just how to get the most out of the tax relief available.

For a net cost of 6k now, OP could get an extra 10k tax free lump sum when they retire.

RedOnion said:

I think you missed the point of the question.

They're not looking for a long term risky investment, just how to get the most out of the tax relief available.

For a net cost of 6k now, OP could get an extra 10k tax free lump sum when they retire.

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Fair enough RedOnion (apologies for the misread). But, with consultation fees/commissions of a minimum of €1000.00 is there any point?

Leper said:

Fair enough RedOnion (apologies for the misread). But, with consultation fees/commissions of a minimum of €1000.00 is there any point?

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Yes, there’s a point!

It’s a pure tax play. You put 10k in to a product in October 2019 and if there’s 1k in fees it costs 11k.

You retire in November 2019 and get your 10k back in your lump sum.

Afterwards you get €4K in tax relief, and unless it works differently than it used to, if you pay by October 2019 you can claim the tax relief against your 2018 tax liability.

So the cash flows are:

October -11k
November +14k (assuming you claim the tax relief straight away).

It's known as a Last Minute PRSA. Cornmarket fees I thought were about €500 but may have increased. No need to leave it on investment, it's solely intended to top up the lump sum.

You can do a Last Minute AVC (whether a stand-alone AVC PRSA or plain AVC attached to the main scheme) just before actual retirement. Though realistically at least one month in advance of retirement. If using the likes of Cornmarket to establish the structure, then they will clearly charge a fee (though I would have thought that you might negotiate the amount if you are setting this up with only a short time to retirement).
Even allowing for the set up charge, it’s still a very tax effective investment if you get 40% tax relief on the contribution and get the full 100% back tax free after a few months. You can invest the contribution into a Cash Fund - no risk (since the tax relief is sufficient).

Hi all,

The math of this was summarised in my op and expanded on by Torblednam. This is a no-brainer and an example where financial advice is not really necessary. Cornmarket, who are the leaders it seems in public sector schemes, charge c. €500 for a consultation and a 4% initial contribution charge, plus on-going management charges. It is still worthwhile at these charging levels but why pay these fees to be told to do something that's obvious?

Anyway, since posting yesterday, thanks to google financial advisers, I found what I want - LAbrokers!! These guys are happy to deal with grown-ups (read: execution only) and do not impose either of the above charges. They just charge a standard on-going fund management charge. Deal done oxo!

elacsaplau said:

[From another post, it looks like Cornmarket would cost about €1k between consulting fee and contribution and other charges. Has anyone found a better solution?!]

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Hmmmm! . . . . . sounds like a nice little earner for Cornmarket for little effort.

Do the discount brokers factor in dynamisation?

Hi Shelley,

I struggling to understand the relevance of dynamisation in the context of this thread. Can you elaborate on your query please?