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AVCs

  • 06-01-2022 7:16pm
    #1
    happydude742
    Registered Users Posts: 67 ✭✭


    I've been investing in an AVC for a few years but I'm wondering is there a target that people should aim to reach for an AVC or should you just keep paying into it forever? I have a friend who put 40k into an AVC, has seen that grow to 75k since he stopped investing in it and expects it to be over 100k by the time he retires (which should bring about 5 years off his retirement age). Just wondering if other people pay in to hit a certain target.



Comments

  • #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,739 Mod ✭✭✭✭Henry Ford III


    Talk to your pension scheme administrators.

    Everybody has different goals. For some the tax relief is an instant score. Others will be attempting to fund something specific.



  • #3
    Quitelife
    Registered Users, Registered Users 2 Posts: 1,267 ✭✭✭Quitelife


    If you already have 1 1/2 times your salary in scheme for tax free lump sum or 25 % ....is there any benefit in putting in AVCs now?

    Yes you avoid tax and USC now but you pay it when you reach retirement age anyways which in my case is ten years away?



  • #4
    ROVER
    Registered Users Posts: 429 ✭✭ROVER


    https://www.boards.ie/discussion/comment/118450941#Comment_118450941

    The main advantage of AVC is to boost your pension if you do not have full service or you wish to retire early. Up to 40% tax relief on contributions. You do not get relief on USC or PRSI. The fund gain is tax free. If you invested in a non pension fund your fund gain would be taxed at 41% at withdrawal or every seven years which ever is first. You can take your tax free lump sum at retirement out of your AVC pot and avoid having to commute your main pension. This avoids your main pension payments being reduced at retirement.



  • #5
    Quitelife
    Registered Users, Registered Users 2 Posts: 1,267 ✭✭✭Quitelife


    https://www.boards.ie/discussion/comment/118451416#Comment_118451416

    Thanks Rover..my query might be more complex. Ive a parked DB of 20K built up before the company closed the DB scheme and then set up a DC scheme in which ive 140K built up...my salary is 60K so that means i can take 90K tax free at retirement out of the DC ?.....i dont think i can drawdown 25% of overall pensions unless they put a value on DB part as well??...im putting in 400 month AVC but im wondering am i wasting my time as yes im avoiding 40% tax now but will pay same tax when i retire in ten years time.



  • #6
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,739 Mod ✭✭✭✭Henry Ford III


    https://www.boards.ie/discussion/comment/118452375#Comment_118452375


    I think you should really talk to your pension scheme administrators. That's not a straightforward position.



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