AVC/Income Protection

chases0102

Hi folks - just wondering what people's experience of the above have been?

Have heard carying reports on the Income Protection in particular - insofar that Cornmarket can be difficult to work with in the event that you need it.

Post 2004/Pre 2012 teacher, want to retire at 60 - hence the AVC.

TheDriver

Don't know about avc but income protection I do have. Anyone in the insurance industry says its a very good product. I've heard a few had issues but others didnt.

rainbowtrout

Are you able to draw down an AVC at 60 if you are not in receipt of your teaching pension? Given that you won't get that until 65 is there another plan for income aside from the AVC which is only a top up?

chases0102

Good question - my understanding is that you would draw down the AVC at 60 alright, then the teaching pension at 65. Not sure what it means re lump sum.

rainbowtrout

chases0102 wrote: »

Good question - my understanding is that you would draw down the AVC at 60 alright, then the teaching pension at 65. Not sure what it means re lump sum.

Lump sum is part of the pension. AVCs are primarily designed to bridge a shortfall in your pension if you don't have the full years done on retirement. So to top up your pension/ buy back years etc. The revenue have a cap on how much you can get from your pension tax free (i.e. lump sum payment), so if this is less than you would get on a full pension the AVC is bridging that gap.

Assuming you retire at 60, and you can draw down the AVC at that age, would it be enough to live on? My gut feeling is no. How many years will you have done at 60?

chases0102

Yeah, I agree. Figures being bandied about now may not suffice to live on. I'm 33 now, will have 33 years done at 60.

Is there an alternative to AVCs in that case I wonder? I would like to start thinking/planning/implementing a strategy to retire at 60.

rainbowtrout

chases0102 wrote: »

Yeah, I agree. Figures being bandied about now may not suffice to live on. I'm 33 now, will have 33 years done at 60.

Is there an alternative to AVCs in that case I wonder? I would like to start thinking/planning/implementing a strategy to retire at 60.

Buying back years (Notional Service Purchase) from your ETB/Dept of Education is usually the alternative, but your main problem is wanting to retire at 60 and not getting your teaching pension until you are 65. Realistically unless you can depend on a spouse's income, or have a farm or some side line or can work at something else for a few years, you are fairly restricted. Not a pension expert by any means, but have a public sector pension means most of that will eat up what you are allowed receive as a tax free lump sum on retirement. I suppose in theory you could pay in the max amount allowable to your AVC, but what return will you get for that at 60. Even if you are to allow for living at state pension level (12k a year), you'd be looking at needing to draw down 60k over 5 years from that fund.

Of course you could work part time, mark exams for SEC, do grinds etc, but it's not ideal if you are dependent on it rather than it being a top up. Not easy to retire early from teaching since 2004. You'll also have to consider if you have a mortgage, kids in college etc when you get to that point and can you afford to service those costs with a much smaller income.

killbillvol2

You can't use your AVC as a pension before you retire. You can currently take a once off withdrawal of 30% at any stage but the main fund is meant as a top up to your lump sum and pension.

In practice the real benefit is in maximising your lump sum by making up the shortfall as that's tax free. The remainder of your AVC pot will be in a new fund after retirement and you can draw it down but it's taxed at your marginal rate.

You should spend some money and get proper financial advice on all of this.

TheDriver

killbillvol2 wrote: »

You can't use your AVC as a pension before you retire. You can currently take a once off withdrawal of 30% at any stage but the main fund is meant as a top up to your lump sum and pension.

In practice the real benefit is in maximising your lump sum by making up the shortfall as that's tax free. The remainder of your AVC pot will be in a new fund after retirement and you can draw it down but it's taxed at your marginal rate.

You should spend some money and get proper financial advice on all of this.

But you can retire early on an actuarily reduced pension and use avc to top up?

killbillvol2

TheDriver wrote: »

But you can retire early on an actuarily reduced pension and use avc to top up?

Yes, but Revenue won't allow you to top up the lump sum to the maximum. The bastards have a formula to reduce the tax free top up.

Snapgal

I am paying AVCs and Income Protection with Cornmarket since 2005.In the last 5 years since giving up my CID position to relocate closer to home am am thinking is it really worth it paying out all that money. Every year since I gave up my CID position I have been in a new school. Everything was fine when was in an RPT position in a volutary school ie mainly ASTI members but I felt Cornmarket were a bit hesitant and slow to renew my Income Protection subscription when was joining an ETB school in a job share contract. Was back in a Voluntary school again last year but my hours for this coming year were way too low so have just been offered a job share position in ETB school I was in 2 years ago. I hate having to ring Cornmarket again and explain how have moved to new employer again. I only took out AVCs as even though I qualified in 2003 ie pre 2004 my year of subbing in 2003/04 is not recognised as year towards pension - dept argument is school paid me and not the dept. I know of a person who qualified post 2004 but who had a part time contract with the dept the year before so she will be able to retire at 55 - its just so wrong and unfair.
Also I see Cornmarket take out a 10 euro Variable from my payslip every two weeks - don't even know what this is but will ring them Monday. With how casualised employment of teaching has become ie very unlikely I will be ever CID again am prepared to leave the profession so probably will leave paying money to Cornmarket bt have paid so much money on AVCs and Income Protection since 2005.

man_no_plan

Snapgal wrote: »

I am paying AVCs and Income Protection with Cornmarket since 2005.In the last 5 years since giving up my CID position to relocate closer to home am am thinking is it really worth it paying out all that money. Every year since I gave up my CID position I have been in a new school. Everything was fine when was in an RPT position in a volutary school ie mainly ASTI members but I felt Cornmarket were a bit hesitant and slow to renew my Income Protection subscription when was joining an ETB school in a job share contract. Was back in a Voluntary school again last year but my hours for this coming year were way too low so have just been offered a job share position in ETB school I was in 2 years ago. I hate having to ring Cornmarket again and explain how have moved to new employer again. I only took out AVCs as even though I qualified in 2003 ie pre 2004 my year of subbing in 2003/04 is not recognised as year towards pension - dept argument is school paid me and not the dept. I know of a person who qualified post 2004 but who had a part time contract with the dept the year before so she will be able to retire at 55 - its just so wrong and unfair.
Also I see Cornmarket take out a 10 euro Variable from my payslip every two weeks - don't even know what this is but will ring them Monday. With how casualised employment of teaching has become ie very unlikely I will be ever CID again am prepared to leave the profession so probably will leave paying money to Cornmarket bt have paid so much money on AVCs and Income Protection since 2005.

You can move your avc to another provider without any hassle and it won't matter what sector you are in.

The income protection is similar, while the union schemes are good, similar cover can be bought privately and at a competitive price.

The cornmarket scheme is good value I believe but it includes life assurance too. When you factor in your death in service benefit or your spouses/children's pension you may be over insuring yourself!

Watch your meals don't start to taste funny