Hi,
I’m looking into my pension arrangements at the moment and have quite a few questions which I would like to get clarity on.
My situation is
Teacher, 41, pre-2004 entrant (an ‘old entrant’).
Began teaching at age 23, with two career breaks since (career breaks are not a break-in-service, so I remain on the ‘old’ pension scheme)
Purchased AVCs from/through Cornmarket from 2004-2008; not sure why I stopped, but I do recall there was somewhat of an anti-Cornmarket feeling at the time, perhaps I was influenced by this.
I began purchasing Notional Service from the Dept. of Education about 5 years ago. This will make up my shortfall in years, bringing me up to 35 years service.
Unmarried, no children and no plans to change this situation.
Some of my questions are;
1) I am 41, so I can contribute 25% of my gross salary to a pension and get tax relief on it. This tax relief will be at my marginal rate, i.e. 40%. This is, in general, very tax-efficient so I would like to do it. Is all this correct?
2) At the moment, I am contributing
‘Dept. Of Education’ Pension 6%
Spouse and Child Pension 1.5%
Notional % Contribution, I am not sure of (For ease of use, let’s say 2.5%)
So, 6% + 1.5% + 2.5% = 10%.
Therefore, am I ‘wasting’ 15% of my tax-relief allowance? (Allowable tax-relief 25% - Claimed tax-relief 10% = 15%)
If I am ‘wasting’ it (perhaps ‘not utilising it to its maximum’ would be a better phrase), is there anything I could/possibly should be doing in order to better make us of the tax-relief?
3) With this in mind, can I resume my Cornmarket AVC payments? Or transfer that AVC money to another AVC PRSA with another Revenue approved provider of my own choice? Or just allow the Cornmarket AVC to ‘sit’ and open another AVC PRSA with another Revenue approved provider?
4) If I resumed my Cornmarket AVC payments, can I over-contribute to my pension (get tax-relief now, but suffer on drawdown/in retirement)? Is there a tipping-point at which I should not put money into an AVC?
5) My ideal would be; Continue purchasing Notional Service . Max out my tax-relief allowance (25% of gross) through an AVC PRSA of my own choice. Retire and have my ‘Dept’ pension, a big lump sum (with the AVCs having built it). If the lump sum was over 200k, could I put the excess in an ARF and would this shield it from marginal rate/punitive tax? Could I get the AVC money as a drip feed on top of my reglular Dept. pension? I am inclined to think this must not be possible, Revenue are hardly that generous ...
6) I never though about it until now, but does holding the Cornmarket AVC (currently c. 8K) and purchasing notional at the same time put me in breach of anything?
7) I have been doing some reading on investment it would seem that a pension 'wrapper' is a tax efficient way to invest. If I could, in my situation, make use of any such 'wrapper', it would be great. But not sure if I have the scope to do this, at least in a tax-efficient way.
I have a few more questions, but I’ll try to get clear on the above first.
Any help/insights/experiences would be appreciated
I’m looking into my pension arrangements at the moment and have quite a few questions which I would like to get clarity on.
My situation is
Teacher, 41, pre-2004 entrant (an ‘old entrant’).
Began teaching at age 23, with two career breaks since (career breaks are not a break-in-service, so I remain on the ‘old’ pension scheme)
Purchased AVCs from/through Cornmarket from 2004-2008; not sure why I stopped, but I do recall there was somewhat of an anti-Cornmarket feeling at the time, perhaps I was influenced by this.
I began purchasing Notional Service from the Dept. of Education about 5 years ago. This will make up my shortfall in years, bringing me up to 35 years service.
Unmarried, no children and no plans to change this situation.
Some of my questions are;
1) I am 41, so I can contribute 25% of my gross salary to a pension and get tax relief on it. This tax relief will be at my marginal rate, i.e. 40%. This is, in general, very tax-efficient so I would like to do it. Is all this correct?
2) At the moment, I am contributing
‘Dept. Of Education’ Pension 6%
Spouse and Child Pension 1.5%
Notional % Contribution, I am not sure of (For ease of use, let’s say 2.5%)
So, 6% + 1.5% + 2.5% = 10%.
Therefore, am I ‘wasting’ 15% of my tax-relief allowance? (Allowable tax-relief 25% - Claimed tax-relief 10% = 15%)
If I am ‘wasting’ it (perhaps ‘not utilising it to its maximum’ would be a better phrase), is there anything I could/possibly should be doing in order to better make us of the tax-relief?
3) With this in mind, can I resume my Cornmarket AVC payments? Or transfer that AVC money to another AVC PRSA with another Revenue approved provider of my own choice? Or just allow the Cornmarket AVC to ‘sit’ and open another AVC PRSA with another Revenue approved provider?
4) If I resumed my Cornmarket AVC payments, can I over-contribute to my pension (get tax-relief now, but suffer on drawdown/in retirement)? Is there a tipping-point at which I should not put money into an AVC?
5) My ideal would be; Continue purchasing Notional Service . Max out my tax-relief allowance (25% of gross) through an AVC PRSA of my own choice. Retire and have my ‘Dept’ pension, a big lump sum (with the AVCs having built it). If the lump sum was over 200k, could I put the excess in an ARF and would this shield it from marginal rate/punitive tax? Could I get the AVC money as a drip feed on top of my reglular Dept. pension? I am inclined to think this must not be possible, Revenue are hardly that generous ...
6) I never though about it until now, but does holding the Cornmarket AVC (currently c. 8K) and purchasing notional at the same time put me in breach of anything?
7) I have been doing some reading on investment it would seem that a pension 'wrapper' is a tax efficient way to invest. If I could, in my situation, make use of any such 'wrapper', it would be great. But not sure if I have the scope to do this, at least in a tax-efficient way.
I have a few more questions, but I’ll try to get clear on the above first.
Any help/insights/experiences would be appreciated
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