Use AVCs to retire at 60?

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plan2retire

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Hi. Im looking at how best to set myself up to retire at 60 and not sure of implications or whats possible.

My "plan":
- Im 48
- I have a very good DB pension which im thinking i would access at 66 and should be enough to provide for comfortable retirement (no need to top up).
- I started paying ~18k per year into AVCs a few years back and am planning to continue that up to age 60, at which point, im expecting there should be enough to cover ~6 years between 60 and 66.
- The AVCs are deducted from salary, its a scheme organised through my employer, but managed by a provider.

My main question is if it is possible to cash in the AVCs at 60, and leave my DB pension sit until 66? And if so, what are the tax etc implications?

Thanks for any advice you can offer.
 
The short answer, I believe, is no. Since your avc is done through payroll, the two are linked together. But there is noting stopping you opening your own PRSA now with one fo the low cost providers and pay into this instead and claim the tax back form revenue or get tax credit/bands adjusted by revenue . which would be nearly the same thing as ways it done thought payroll currently. This one could then be retired at 60 if you wanted leaving your DB scheme untouched until you want to retire it
 
irbx said:
But there is noting stopping you opening your own PRSA now with one fo the low cost providers and pay into this instead and claim the tax back form revenue or get tax credit/bands adjusted by revenue . which would be nearly the same thing as ways it done thought payroll currently. This one could then be retired at 60 if you wanted leaving your DB scheme untouched until you want to retire it
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Only if the OP has a separate source of income to the main employment income. An AVC-PRSA has the same access rules as a standard AVC.
 
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You can only access your AVCs when you start taking your PS pension.
You would need to start this at age 60.

Will you have 2080 class A Prsi contributions at age 60 ?
If not read this thread

Key Post - PRSI and planning retirement

This Key Post is in the form of a FAQ where I don't know many of the answers. I will update the post as I get answers. 1. PRSI payable on reaching state pension age Answer: 0 (Class M) 1a. Does this relate to the start of the tax year in which you become 66? Or to after your birthday? Answer...
www.askaboutmoney.com
 
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Thanks a mill for those answers. I'll need to have a bit of a read through so I'm tracking. I will only have 36 years of PRSI contributions (as a full time employee) So I'm assuming this means I'll only have 36×52 (1872) contributions? Sorry for the basic questions, I'm not familiar with the area.
 
S class said:
Sorry I thought this post was in the Public Sector forum.
My mistake.
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Does that change any of the info in the replies above? Does the 2080 contributions threshold apply only to public pensions?
But the rules around having to take the AVCs and DB pension at the same time still apply I'm taking it?
And thanks for all the replies, all very helpful.
 
plan2retire said:
Does that change any of the info in the replies above? Does the 2080 contributions threshold apply only to public pensions?
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2,080 PRSI contributions or credits that are reckonable for the contributory pension is what's needed to qualify for the full pension. Otherwise it would be pro-rata. E.g. 1,872 would give 1,872 / 2,080 x 100 = c. 90% of the full pension.
 
The rules are the same for any DB pension, PS or private sector. You can only access your AVCs when you start your DB pension

2080 Prsi contributions only apply for qualification for the full rate state contributury old age pension.
 
Just while we're on the topic. When I'm calculating my wife's AVC amounts (with a view to maxing out to 25%), do I simply take the amount of contributions going into her DB pension each month and subtract that from the gross number representing 25% of her income in order to work out the max AVC that she can make?
 
S class said:
The rules are the same for any DB pension, PS or private sector. You can only access your AVCs when you start your DB pension

2080 Prsi contributions only apply for qualification for the full rate state contributury old age pension.
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I'm 57 and have a DB pension and 2 separate funds from 2 different employers.
Employer 1. Small DB payable at 65 and small fund from AVCs.
Employer 2. A larger fund from employer contributions & AVCs.

Can I access the fund from Employer 2 at 62 and leave the DB (and that fund) sitting until I turn 65?
In this case how does the tax free lump sum work?
 
If the rules of the employer 2 scheme allow you to take benefits at age 62, you can do this. This does not affect your employer 1 scheme.

You can take your tax free lump sum immediately from the employer 2 scheme at the allowed access time.

Then at age 65 you can get the tax free lump sum from the employer 1 scheme.
 
S class said:
If the rules of the employer 2 scheme allow you to take benefits at age 62, you can do this. This does not affect your employer 1 scheme.

You can take your tax free lump sum immediately from the employer 2 scheme at the allowed access time.

Then at age 65 you can get the tax free lump sum from the employer 1 scheme.
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Thank you @S class . I've been reading your excellent contributions re. Job Seekers Benefit, BP65 eligibility and Rental Income and also the relevant gov.ie links posted by Freelance.
Your post in "can-a-person-with-rental-or-investment-income-over-7500-euro-per-year-qualify-for-65s-benefit" referred to 2 employments. What if there is an ARF and rental income?

I currently have approx. 1660 Reckonable Contributions.
I have 2 rental incomes with my wife:-
  1. €800 currently tax free per month for a Ukrainian couple (ARP) so say €1600 pm taxable in the future when ARP ends.
  2. £800 GBP per month from the UK, make returns to Inland Revenue but pay tax on it here.
If I was to stop work voluntarily at say 63, due to stress say, assuming my current employer (2) allowed me to 'retire' ie tax free lump and ARF on with 4% per year. The 4% would be well over the €5000 per year.
Could I qualify and then re-qualify (13 weeks working) for JSB (9 months JSB each time) so that I'm on Job Seekers Benefit when I hit 65 and can continue until I'm eligible for the State pension?
 
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qeivinc said:
Thank you S class. I've been reading your excellent contributions re. Job Seekers Benefit, BP65 eligibility and Rental Income and also the relevant gov.ie links posted by Freelance.
Your post in "can-a-person-with-rental-or-investment-income-over-7500-euro-per-year-qualify-for-65s-benefit" referred to 2 employments. What if there is an ARF and rental income?

I currently have approx. 1660 Reckonable Contributions.
I have 2 rental incomes with my wife:-
  1. €800 currently tax free per month for a Ukrainian couple (ARP) so say €1600 pm taxable in the future when ARP ends.
  2. £800 GBP per month from the UK, make returns to Inland Revenue but pay tax on it here.
If I was to stop work voluntarily at say 63, due to stress say, assuming my current employer (2) allowed me to 'retire' ie tax free lump and ARF on with 4% per year.
Could I qualify and then re-qualify (13 weeks working) for JSB (9 months JSB each time) so that I'm on Job Seekers Benefit when I hit 65 and can continue until I'm eligible for the State pension?
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I was advised recently that as long as you have a minimum weekly earning of €38 and pay class A PRSI on this income for a minimum of 3 months (13 weeks) that you become eligible again for JSB for a further 9 months and that you can "rinse and repeat" until you reach 65.

I was also advised that as I am 62 that if claiming JSB that I don't need to be genuinely and actively seeking employment however when contacting the DSP they didn't agree with this and indicated that if in receipt of JSB I do need to be actively seeking employment up to 65. The initial advise was provided by a reputable organisation which I have queried this with and am awaiting their response, although I imagine the DSP must be correct.
 
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