AVC/PRSA

LA Brokers in Newcastle/Greystones in Wicklow (https://www.labrokers.ie/avc-for-public-private-sector/) are a discount broker but you'd have to know your AVCs as they don't offer advice but are significantly cheaper.

As I didn't know anything about AVCs at the time, I used the PSRA (Public Sector Retirement Advisors) broker in Maynooth and they moved me from Cornmarket/Irish Life to a Zurich PSRA/AVC (https://www.expertadvice.ie/about-us).

Yes PSRA are good and cater for teachers so you'll get looked after. LA is probably the best value but it's a case of "here's the form, send it in , goodbye".

Of course Cornmarket will set it up through your payslip so don't have to claim back from revenue and it's done automatically. I went with execution only with Cornmarket just for that reason.

I used to have an old PRSA before teaching and had to claim back every following year, really it was very little hassle and you can leave it for 2 years then claim back a nice chunk which I saw as a form of savings.

Why did PSRA advise to stop the AVC?

Just out of curiosity, why does having an AVC with near full service not benefit you?

I've heard a few people say that's they were advised to stop their AVC as it wouldn't be of benefit but I've never understood why. Like you are still getting (potentially) 40% relief on the AVC contribution.

Thanks for that. My own situation is a bit complicated too , PRSA with previous private sector + not having full years service so also took out AVC.

The problem is I've done so much random subbing for about 12 years before CID that I don't know the overall contribution (luckily I didn't break my service with the department for this year's, so I'm still in previous pension scheme to the current).

Is there someone I can contact in the department who will get the lovely job of calculating my random contributions.... Presume it takes about 20 years for them to do it 😁

If a public servant has the full 40 years pension contributions, there is less scope to do AVCs.

This may help:

• Additional Voluntary Contributions (AVCs) exist as a mechanism to supplement the benefits received under an existing occupational pension scheme where these are less than the maximum pension benefits allowed under Revenue rules. AVCs cannot be made unless someone is a member of an existing occupational pension scheme.
• Revenue's rules around the maximum benefits that can be received under an occupational pension scheme are contained in their pensions manual, which distils many of the rules from the Taxes Consolidation Act.
• The general rule for occupational pension schemes is that they cannot exceed 2/3 final salary. There are multiple variations as to how 2/3 salary can be reached depending on the kind of pension e.g. defined contribution or defined benefit.
• The maximum benefits that someone can receive under their pension will be reduced if they retire early.
• If a defined benefit occupational pension scheme has a 1.5x Final Salary Tax Free Lump sum, the maximum pensionable remuneration allowable under revenue rules for that scheme (according to actuarial calculations) will be 40/80s of final salary, or half of final salary. What constitutes "Final Salary" is again determined through actuarial calculations.
• An Integrated defined benefit pension is one which has regard to the current levels of State Pension in calculating the benefits gained under the scheme. The current pension scheme for new entrant public servants - the Single Public Service Pension Scheme - is an integrated scheme.
• While an integrated defined benefit pension scheme might have regard to the State Pension in assessing what benefits are made available under the scheme, the State Pension itself is not relevant for calculating whether the maximum benefits under revenue rules have been reached. In other words: in assessing scope for AVCs in such a scenario, the State Pension should be ignored and if the scheme pays less than 50% final salary, an AVC pot can be used to make up the deficit.
• Income Tax relief is granted on pension contributions at the individual's marginal rate (e.g. 20% or 40%). Relief is not granted on USC and PRSI.
• The amount that can be contributed to an AVC in any given year is capped by revenue as a percentage of salary in various age brackets.
• If you're paying 40% income tax now and expect to be below the 40% income tax threshold in retirement, pension contributions are an absolute no brainer as this is "true" tax relief. Even where total pensionable remuneration in retirement is expected to exceed the 40% income tax threshold, and is likely to be hit by USC again on the way out, making pension contributions up to revenue limits is likely to be a financially advantageous way to invest because a pension:
  • is the only readily accessible way to invest in collective investment vehicles for equities in Ireland without suffering the approx 30% long term hit to growth from the deemed disposal rule without having to deal with accountants and form 11s for the rest of your life;
  • gains compounding benefits not available in any other investment product from the "loan" of income tax from revenue - as outlined in Marc's post on the first page of one of the key posts in this forum.
• It's extremely important not to over-invest in AVCs by exceeding revenue rules for pension benefits in the short term (by over-contributing each year) or in the long term (by over saving). The benefits gained under your occupational scheme will be reduced to compensate in the event you over-fund your AVC pot, and revenue might claw back tax relief on any excessive contributions.

Thanks as always Geuze.

so if I'm reading this correctly, the amount I put in with AVC must not exceed 2/3 of final salary! Am I reading that correctly!

Example: PS hired pre-April 1995

PS pension = 50% of former salary

Lump-sum = 1.5x final salary

The lump-sum is worth (150% / 9) = 16.67% of salary.

So total benefits are 50 + 16.67 = 66.67% of salary.

So no scope to do AVCs, as you are at the Revenue max already.

However, even for a PS with full 40 years service, there is still usually scope to do an AVC.

Brokers on AAM have stated this repeatedly.

I think this is because the spouse/childrens pension can be enhanced, although I'm not totally clear here.

Is anybody paying only a 0.8% fee/charge for their pension per year?

'Irish pension charges ‘good value’ at 0.8%, says Insurance Ireland Insurance Ireland suggests that plan for auto enrolment will put downward pressure on pension charges': https://www.irishtimes.com/business/2023/06/16/irish-pension-charges-good-value-at-08-says-insurance-ireland/

Here's Cornmarket published fees and charges for AVCs for TUI members, and they're nothing like 0.8% - and it doesn't help that they're being obscurantist about all the charges rather than just giving a final figure for the annual charge: https://www.cornmarket.ie/uploads/12748_Update_AVC_charge_statements_11-17_rebranded_TUI.pdf

I have seen a few AVC with Cornmarket at 595 set-up fee / 100% allocation / 1% AMC.

See this one for example:

https://cornmarket.cdn.prismic.io/cornmarket%2F9664aa53-335c-47e3-b5af-deca11cb6534_14010+avc+charges+statement+-+irish+life+multi_11-18_form.pdf

These rates are from Nov 2018

I see TUI on the list.

595 set-up fee, 100% allocation, 1% AMC.