DB scheme avcs

Hi all,
Hopeful I can articulate the questions that are in my head so here goes!

I am 36 , I am in a DB scheme in my current employer for the last year. I will not be with this company long term- most likely for the next 1.5 years to 2 years. Also given the nature of my position I am privy to the strong possibility that the DB scheme will be wound up.

My questions are:
I have the cash to make extra pension payments in the form of avcs, the pension scheme allows for this. Would this be a mistake in the context of the wind up possibility and also the fact that I will be leaving in the next few years?


Also- given that the company scheme allows for avcs would I legally be allowed to start my own prsa instead and put my extra cash here instead (obviously within the % limits allowable for my age) and avail of the tax reliefs?

Also if this is allowable but the company will not pay the money to the prsa directly from my wages, how do I avail of the tax relief if I have to pay from my net pay directly in the prsa?

I hope my questions make sense, thank you for taking the time to read them
Mark

Hi Mark

The AVC payments are ring fenced from the main DB scheme. If you would like them to be completely separate from the scheme, you can contribute to a PRSA AVC (you are not eligible to contribute to a PRSA...confused? You should be ). You claim back to tax relief from the Revenue.

Is it a mistake to make them? It is incredibly expensive to fund an income for 25-30 years in retirement, so the more money you can save, the better. The AVC's will always be your money whether you are working for your current employer or not.

Steven
www.bluewaterfp.ie

Hi Stephen,
Thanks for taking the time to reply-much appreciated. I have 2 further questions!

In my situation is there any particular advantage/disadvantage of avcs in the db scheme versus avcs in a Prsa avc or would they both be much the same?

Also I have a 15k lump sum that I want to put into avcs. at the end of 2015 is it possible for me to put this into my pension as a lump sum Avc (or whatever lump sum would bring me up to my maximum tax relief figure- 20%) or would I be better off just maximising my contributions on a monthly basis?
Again thank you for your time
Mark

Mark_jmc said:

Hi Stephen,
Thanks for taking the time to reply-much appreciated. I have 2 further questions!

In my situation is there any particular advantage/disadvantage of avcs in the db scheme versus avcs in a Prsa avc or would they both be much the same?

Also I have a 15k lump sum that I want to put into avcs. at the end of 2015 is it possible for me to put this into my pension as a lump sum Avc (or whatever lump sum would bring me up to my maximum tax relief figure- 20%) or would I be better off just maximising my contributions on a monthly basis?
Again thank you for your time
Mark

Click to expand...

With the avcs through the DB scheme you can take them at 50 subject to being allowed to retire the main benefits at that time also. Prsa is 60 I think. And your scheme may/should have negotiated a better allocation for avcs than you would have in a prsa so you would have more of your money invested, not going on fees.

JoeRoberts said:

With the avcs through the DB scheme you can take them at 50 subject to being allowed to retire the main benefits at that time also. Prsa is 60 I think. And your scheme may/should have negotiated a better allocation for avcs than you would have in a prsa so you would have more of your money invested, not going on fees.

Click to expand...

The OP must go into a PRSA AVC, which he can access from age 50 too (if the PRSA is linked to an employment scheme it's 50, if it's just a personal plan, it's 60).

What to look out for:

1. Choice - you probably get better fund choice under the PRSA AVC and you can pick the provider.
2. Charges - it is probably cheaper in the employer scheme as the employer may be paying for some of the costs. With the PRSA, you're doing your own thing, so you have to pay the costs yourself.

Re the 15K, you can make the investment by the end of October and claim tax relief in respect of 2014 (you also have to make a tax return by that date). A payment after that date, tax relief is claimed in respect of 2015 earnings. You could make the lump sum to max out 2014 and then start the AVC's from November?

Steven
www.bluewaterfp.ie

Thanks for the replies
Stephen- sounds like a plan!

Your welcome Mark!

Steven