Query on making AVCs.

Hi, grateful for any advice on the following.

I am a single male in my mid 20s. I am a vested member of the Public Sector Single Pension Scheme with no other pension. My gross earnings are approx €40k per annum.

My day to day, living and accomodation expenses are limited due to personal circumstances. Therefore I am in a position to make additional contributions from my wages and/or potentially make a lump sum contribution to my pension from inheritance and personal savings.

I'm aware that due to my age I am currently limited to contributing 15% of gross salary per annum. As I currently contribute 3% of my gross salary and 3.5% of my net pensionable salary, what annual percentage do I have left to work with it? Is it 12% or less?

Is it advisable to look at setting up a more straightforward AVC scheme through Cornmarket or look into an execution only PRSA AVC that I would have to pay via direct debit and claim back relief through ROS? Is it possible for my employer to account for a PRSA AVC through my wages in order to streamline the process?

Any advice welcome. Thanks.

Contribatter said:

I'm aware that due to my age I am currently limited to contributing 15% of gross salary per annum. As I currently contribute 3% of my gross salary and 3.5% of my net pensionable salary, what annual percentage do I have left to work with it? Is it 12% or less?

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Probably the handiest way is to look at your pay slip and calculate what the percentage your superann deduction is of your gross salary for the relevant period. Subtract that from 15% - it will probably be somewhere around 10-11%.

Contribatter said:

Is it advisable to look at setting up a more straightforward AVC scheme through Cornmarket or look into an execution only PRSA AVC that I would have to pay via direct debit and claim back relief through ROS? Is it possible for my employer to account for a PRSA AVC through my wages in order to streamline the process?

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You can get lower fees and charges by shopping elsewhere - and as you are young it will mean a lot over the longer term. You can't put it through wages but you can get it coded into your Revenue tax credits so that your net take home pay is the same as if you took the Cornmarket route.

As an aside, are you sure about additional pension contributions as opposed to saving for a mortgage? Or are you sorted?

8.5%

See Scope for John

Thanks for the response.

Ruffian said:

Probably the handiest way is to look at your pay slip and calculate what the percentage your superann deduction is of your gross salary for the relevant period. Subtract that from 15% - it will probably be somewhere around 10-11

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I have reviewed my payslips. 3% of my gross salary is deducted as 'Lump Sum Pension '13. In addition, approx 0.8% of my gross salary is deducted as 'Personal Pension' which appears to be calculated from 3.5% of my net pensionable salary, accounting for the contributory state pension. If I take it that I am paying roughly 3.8% of my gross salary into the SPSPS that leaves me with with approx 11% as you suggested.

Whereas the 8.5% suggested by GSheehy looks to be calculated from (15% - 3% - 3.5%)?

Sorry if anything is unclear, I am only recently familiarising myself with how the SPSPS works

GSheehy said:

8.5%

See Scope for John

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I don't think you can generalise a specific percentage from John's example.

Leave aside the age related percentage limit. The percentage of gross salary that can be contributed will vary across individuals depending on (a) the gross salary and (b) the current State Pension rate (which determines the net pensionable salary). The NPR used in John's example is already out of date.

The percentage that an under 30 year old on a gross salary of €45,000 can contribute to an AVC will be different to one on a salary of €90,000.

(Of course, the percentages that a 50+ year old can contribute will be different again.)

Or am I missing something?

Contribatter said:

Thanks for the response.

I have reviewed my payslips. 3% of my gross salary is deducted as 'Lump Sum Pension '13. In addition, approx 0.8% of my gross salary is deducted as 'Personal Pension' which appears to be calculated from 3.5% of my net pensionable salary, accounting for the contributory state pension. If I take it that I am paying roughly 3.8% of my gross salary into the SPSPS that leaves me with with approx 11% as you suggested.

Whereas the 8.5% suggested by GSheehy looks to be calculated from (15% - 3% - 3.5%)?

Sorry if anything is unclear, I am only recently familiarising myself with how the SPSPS works

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You could work it out long-hand and confirm your current pension contributions at the same time.

Currently the NPR is gross salary minus €28,840 (2 * €14420).

So if your current salary is €50,000 your NPR is €21,160. You pay 3.5% of this = €740. Plus 3% of €50000 = €1500.
Total salary deductions on €50,000 is €2240.
15% of €50,000 is €7500.
You can contribute up to €7500 - €2240 = €5260 = 10.5 %.


If your salary is €100,000 you pay 3.5 % of €71,160 = €2490. Plus + 3% of €100,000 = €3000.
Total salary deductions on €100,000 is €5,490.
15% of €100,000 is €15,000.
You can contribute up to €15,000 - €5,490 = €9,510 = 9.5%.

However, you suggest that you are currently being deducted the equivalent of about 0.8% of gross salary as NPR. If this is so it suggests a current salary in the the whereabouts of €38,000 (by my reckoning). Is this the ballpark? If so I personally would not be considering AVCs as the contributions would not get relief at the 40% tax rate. That is the main attraction.