Refund of AVCs, <2 years in scheme

R

rob oyle

Registered User
Messages
728
I intend seeking a refund of my pension contributions made over the last 13 months to my employer's DC scheme. I'm expecting to just contact the scheme administrators and complete the necessary paperwork.

Is there anything else I need to consider? Are there time limits around when such a request can be considered (i.e. if I didn't make the request for a couple of months)?

I have c.€15k of contributions in that time and they are sitting in a low-risk fund during this time.
 
You can seek a refund but only if you are leaving the service of that company and you have less than two years membership.
 
Conan said:
You can seek a refund but only if you are leaving the service of that company and you have less than two years membership.
Click to expand...
As far as I know I meet the criteria (those two items anyway), just wondering if there's a time limit on claiming a refund or if there's anything else I should consider.
 
Another point to note is that you receive a refund of the value of your contributions, less 20% tax. This figure may or may not be the same as the amount you have paid in. In addition, you are presumably aware that your employer will get a refund of the value of their contributions.

While you may have a particular reason for doing this, the loss of the employer contributions often makes this a poor long-term financial planning decision. That said, it may be the case that you'll lose the employer contributions regardless. I know nothing about your circumstances or motivations.
 
Many, many years ago I left a job for another and instead of taking a refund, I was able to transfer the pension rights to my new employer. I t wasn't much but it is amazing how small amounts will mount up over a long period thanks to the cumulative interest.

Unless you need the cash now, I would suggest that keeping your pension contributions in a pension scheme, either the original or transferring to another, is by far the best investment you can make .
 
LDFerguson said:
Another point to note is that you receive a refund of the value of your contributions, less 20% tax. This figure may or may not be the same as the amount you have paid in. In addition, you are presumably aware that your employer will get a refund of the value of their contributions.

While you may have a particular reason for doing this, the loss of the employer contributions often makes this a poor long-term financial planning decision. That said, it may be the case that you'll lose the employer contributions regardless. I know nothing about your circumstances or motivations.
Click to expand...
jpd said:
Many, many years ago I left a job for another and instead of taking a refund, I was able to transfer the pension rights to my new employer. I t wasn't much but it is amazing how small amounts will mount up over a long period thanks to the cumulative interest.

Unless you need the cash now, I would suggest that keeping your pension contributions in a pension scheme, either the original or transferring to another, is by far the best investment you can make .
Click to expand...

Thanks lads, I'd actually put a query into the pension administrator here before posting it here... they've come back in the meantime to say that since I got marginal relief on my contributions going in, the refund will also be taxed at 40%. I haven't argued the point with them yet but is it possible that Revenue rules may contradict the statements on their own website? https://www.revenue.ie/en/employing...-as-pay/refunds-of-pension-contributions.aspx
 
rob oyle said:
Thanks lads, I'd actually put a query into the pension administrator here before posting it here... they've come back in the meantime to say that since I got marginal relief on my contributions going in, the refund will also be taxed at 40%. I haven't argued the point with them yet but is it possible that Revenue rules may contradict the statements on their own website? https://www.revenue.ie/en/employing...-as-pay/refunds-of-pension-contributions.aspx
Click to expand...

The administrator is wrong. It should be 20% regardless of your tax position. See 12.6 here. https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-12.pdf
 
The administrator is wrong, tax is deducted at 20%.

It has always struck me as a tax avoidance method that has never been closed. I'm in an OPS for less than 2 years, don't like the job so I'm moving. Before I do, max out my AVC's, get tax relief at 40% and get the refund taxed at 20%. I've been told it's not something you could get away with too often (besides the hassle to looking for a new job). Maybe it's not something that is abused?


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
I think there's no way they can stop you from doing this, unless they can prove that you borrowed the money in order to obtain a short term tax advantage. Failing this, go for it!

That assumes the scheme rules don't allow you to hold on to employer contributions if you leave prior to having two years reckonable service. In that case, circumstances are different and it depends on the ratio between the loss of employer contributions and your personal contributions (basic plus AVC).
 
You must log in or register to reply here.
Back
Top