pension scheme for tax benefit

whizkid9

hi i am thinking of signing up for a pension scheme for getting the tax benefit. I already have a pension scheme from my employer in which 3% of my annual income is deposited. Since i get tax discount for upto 20% of my income, I am thinking of signing up an additional pension scheme via AIB.

Questions
1. Is this advisable?
2. If I put in 10K to the pension plan, I get 4K as tax discount. which looks great. Am i missing something?
3. When can I withdraw the AIB pensions? only after retirement or before?
4. Is there an interest rate for the pension deposits? If so does it covers inflation?
5. If not for AIB which private pension is giving the best interests?
6. Is it possible to withdraw the pensions under any circumstances? in that case, what is the tax rate?
7. I am employed with a university, who deposit the pension under https://singlepensionscheme.gov.ie . In this case, can I put the lumpsum deposit with the same scheme? any disadvantages
8. I was told that AIB/private pension take commission out of my deposit. Is it true? which company takes the minimum commission? Is there a way to directly deposit ?



Thanks a lot for your time

Cheers

Geuze

You appear to be a public servant enrolled in a PS occupational pension scheme?

https://singlepensionscheme.gov.ie/wp-content/uploads/2017/12/Scheme-Booklet.pdf

Note that the contribution rate is 6.5% plus you pay the PRD.

If this is the case, please be aware that an extra personal pension you get should be an AVC.

See page 15:

Can I pay extra contributions?
The option to purchase additional retirement benefits within the Single Scheme is not
available at the moment. However, depending on your circumstances, you may be able to make
additional voluntary contributions to separate Revenue-approved pension arrangements (e.g. an
AVC Personal Retirement Savings Account or a trade union-affiliated AVC Scheme) if you wish to
independently increase your retirement benefits
outside of the Single Scheme.
As your employer cannot provide you with
financial advice, you should seek financial advice
independently

Geuze

whizkid9 wrote: »

hi i am thinking of signing up for a pension scheme for getting the tax benefit. I already have a pension scheme from my employer in which 3% of my annual income is deposited. Since i get tax discount for upto 20% of my income, I am thinking of signing up an additional pension scheme via AIB.

Questions
1. Is this advisable?
2. If I put in 10K to the pension plan, I get 4K as tax discount. which looks great. Am i missing something?

No, 40% tax relief is possible, assuming your marginal rate is 40%


3. When can I withdraw the AIB pensions? only after retirement or before?

Any AVC benefit is taken when you take the main scheme benefits.


4. Is there an interest rate for the pension deposits? If so does it covers inflation?

You choose the funds where your AVC are saved/invested.


5. If not for AIB which private pension is giving the best interests?
6. Is it possible to withdraw the pensions under any circumstances? in that case, what is the tax rate?
7. I am employed with a university, who deposit the pension under https://singlepensionscheme.gov.ie . In this case, can I put the lumpsum deposit with the same scheme? any disadvantages


No.

8. I was told that AIB/private pension take commission out of my deposit. Is it true? which company takes the minimum commission? Is there a way to directly deposit ?


No, there is no way to avoid some fees.

The best you can do is reduce commission.


Thanks a lot for your time

Cheers

You're welcome.

whizkid9

Thanks Gueze.

1. If i make an AVC contribution, then can it be withdrawn before retirement age (66)?

2. Can I make a lump sum contribution to AVC? or only monthly contributions can be made? Asking since I havent made any monthly contributions this year, and wanna check if I can make a lump sum contribution before tax year end

Geuze

whizkid9 wrote: »

Thanks Gueze.

1. If i make an AVC contribution, then can it be withdrawn before retirement age (66)?

2. Can I make a lump sum contribution to AVC? or only monthly contributions can be made? Asking since I havent made any monthly contributions this year, and wanna check if I can make a lump sum contribution before tax year end

AVC benefits are taken at the same time as the main scheme benefits.

Lump sum and monthly conts are possible.

You can make a lump sum until 31 Oct 2019 and apply that to the 2018 tax year.

Liam D Ferguson

What you're looking at is known as an AVC PRSA and you can buy it from any Financial Broker, probably any bank or directly from a pension company. There's a list of pension companies available on the Pensions Authority website here. https://www.pensionsauthority.ie/en/

You won't pay lower charges by going to a pension company directly. They don't offer wholesale prices to customers who approach them directly as that would be undercutting the brokers and banks who sell their products for them.

You should get good professional advice as AVC PRSAs are complex. They must be linked to your main pension scheme benefits. You should also take professional advice on the level of risk you are willing to take with your contributions which will have a bearing on the level of return you will get.

whizkid9

at what age people start signing up for these plans? i am 37.. I am wondering if it makes sense to invest in pensions now? or should i wait until I get older?

colm_c

whizkid9 wrote: »

at what age people start signing up for these plans? i am 37.. I am wondering if it makes sense to invest in pensions now? or should i wait until I get older?

People should start a pension as early as possible, compound interest is the main thing here.

At 37, you are not too young, if you can afford to, start paying into a pension.

Remember, you can't touch the money for 30 years, so if you are saving for major life events, e.g. house or wedding or kids, don't over stretch just to put in your pension contributions.