Also you cannot fund AVC’s in the expectation of retiring early.
If they “overfund” then at retirement, the main scheme benefits might have to be reduced to bring the overall benefits within Revenue limits. Not what you want to happen.
Is her State contributory pension entitlement taken into account in establishing this limit (even though it is not payable at retirement age)? If the State Pension was not part of the equation she would have considerable scope to fund an ARF.
The Revenue limits allow for a max pension of 2/3rds PLUS the State Pension. So if Mary is in an “integrated scheme” (ie her occupational pension takes into account her State Pension) then she will have plenty of scope for AVC’s.
Gordon
The Revenue limit is a 2/3 Pension out of which you can encash a portion for a lump sum. This is equivalent to a pension of 50% Plus a lump sum of 150% of Salary.
However I would point out that if the resulting extra pension income from the AVC fund (whether subsequently invested into an ARF or an Annuity) was going to be taxed at marginal 40% rate plus USC , then the tax advantage of the AVC becomes somewhat negative - 40% tax relief on contributions going in but perhaps a total of 44% tax on the resulting income.
Take my wife’s circumstances; she is likely to have 40 years’ service at age 61. On that basis she’ll get 150% plus 50% (including the State Pension). The supplementary pension stuff is just noise.
We were planning to start funding AVCs for her. My foolish assumption was that the pot would simply ARF and add to our retirement income. It sounds like I am mistaken?
So look to build a fund capable of delivering €13k via annuity rates?
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