Revenue max lump sum on early retirement


Frequent Poster
I'm looking to see what the maximum tax free lump sum is on early retirement for an employee in Public sector - teacher. From research it seems to be max of (i) and (ii):

(i) 3/80ths x actual service at early retirement x final remuneration
(ii) N/NS x LS x final remuneration, where
N=actual service
NS=potential service to normal retirement age, had service continued until then
LS=maximum lump sum receivable had employee stayed until normal retirement age

Putting this into numbers:
(N) Actual service at early retirement = 20
(NS) Potential service to NRA=25
(LS) Max lump sum at NRA = 1.5 times salary (as they have 20 years service) = 55k x 1.5 = 82.5k
Revenue max tax free lump sum = (20/25)*82.5=66k.

Q1: Are those figures correct?

The actual lump sum they are due to get is around 37k, as it based on 3/80ths x actual service and then reduced for early retirement.

Q2: Does that mean they can add in 28k from their AVC on a tax free basis?
Q3: When they actually come to early retire and take their AVC etc. who confirms all of the above?

Thanks for any help/suggestions.


Registered User
I think your calc of 66k is correct. Please note that the calc of final renumeration can be complicated so a review of recent years income should be done to make sure you are using the highest figure.

In theory you are right, the balance of the max lump sum comes from the AVC pot. If no AVC pot available the individual can make a contribution of the amount to an AVC scheme, claim the tax relief and then get it back as a tax free lump sum.

The AVC provider should do all the calcs on this and you will have to provide them with details of the main scheme retirement. Please note that the main scheme should know of the existence of the AVC. They don't work in isolation. It is in effect considered one scheme.

Please note that retirements like this are extremely technical so advise should be sought beforehand to make sure everything is in order in advance. The AVC provider will be able to assist as well and should be familiar with the process.

Early Riser

Frequent Poster
As noted by by Fergal19, you should contact your AVC broker (eg, Cornmarket) a few months before retirement about this. They will do the calculations re the maximum you can take as a tax free lump sum from the AVC fund to top up your main scheme lump sum. They should liaise with your pay/pension department about this.

I am not sure about your calculations and hope you are correct. More pessimistically, the Revenue max may be €55k*3*25/80 = €51.5k. That would leave an AVC top up of €14.5k. Hopefully this is wrong.

EDIT: On checking, this pessimistic calculation is wrong. I believe your sums are correct, czechmate.
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