AVC's

S

Sheila

Guest
Am leaving my job soon and have AVC's aswell as a defined benefit pension plan. Any one know what my options are - is is true that I can't touch both until I reach retirement age? If thats the case should I change my AVC options before I leave?

Thanks
 
If you have been a member of the scheme for two or more years (including any vesting period transferred in from a previous scheme if applicable) then your fund (including preserved benefits in respect of employer contributions) is locked away until retirement. If you were a member for less than two years then you may be able to take a refund of personal (including AVC) contributions only after application of tax at c. 23%-25% (can't remember what it is these days) which might not be the most prudent course of action. With under two years membership you will not be entitled to preserved benefits in respect of employer contributions unless the scheme specifically allows for a shorter than two years preserved benefits vesting period. When you leave the pension scheme trustees or administrators should give you a form outlining your leaving options (usually one or more of (a) leave the fund invested in the company scheme (for now or indefinitely) (b) transfer to another occupational scheme (now or eventually) (c) take a refund of personal contributoins only (if applicable) (d) transfer to a buy-out bond). There are several other topics dealing with the implications of leaving a job and what it means for your pension to have a browse around and have a read of them. The Pensions Board website is also a good resource for info:

www.pensionsboard.ie

> If thats the case should I change my AVC options before I leave?

I don't understand what you mean and why you think that this would make any difference?
 
Less than 2 years ...

Does this mean that in effect if you have less that 2 years you could make a tax saving ie tax relief received at 42% + 6%PRSI and you only have 23% on withdrawing your personal AVC's with no further tax obligations...???

Surely not ...!!!...that could be a servious tax saving ...
 
I can't remember what tax rate applies to a refund of personal/AVC contributions from an occupational fund where applicable but it was 25% when I did it years ago (don't ask...:\ ). Perhaps it was standard rate plus PRSI/health levy or something like that. Seems like a bit of a loophole and that a high rate taxpayer can save in this way but whether or not it's a prudent thing to do is arguable. Maybe the rules have changed since I did it (early 90s)?
 
<thinks> ... perhaps the 20% is simply what's deducted at source and the refund is still liable for declaration and further tax (22% for a 42% taxpayer) and PRSI/health levy deductions?
 
Less than 2 years...

Got this from Revenue.ie ...looks like no further obligations.


"What if I take a refund of Superannuation contributions?
If you receive a refund of Superannuation (pension scheme) contributions, the pension fund will automatically deduct tax at the standard rate of tax (currently 20%) from the refund (prior to 5 December 2001 the rate was 25%). This will satisfy all your tax obligations on this income."
 
You must log in or register to reply here.
Back
Top