Can I have an AVC for public sector & also a PRSA for self-employed

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123ABC

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Hi everyone,
I'm new to here! I'm just wondering if someone can offer some advice!

I work four days a week in the public sector and I have AVCs for this with Cornmarket.

I also work as a therapist in private practice - self-employed with my own small business - and see about 6 or 7 clients a week.

I'm wondering if I'm able to set up a PRSA for the therapy income (ideally with Cornmarket but anyone really). Seemingly by putting money into the PRSA it's a more tax efficient way?
Or is there a stipulation that I can only have AVCs or a PRSA?

I have an appointment with Cornmarket but that's not until two weeks time.
I've a feeling I can only open a PRSA with them for funds that come from a public sector job (but I could be wrong).

Sorry...pensions isn't my forte!
Thanks a mill in advance!
 
If your public sector income is less than €115,000 per year then yes, you can make contributions into a Personal Pension or PRSA separately in respect of your private income. Cornmarket can probably arrange this for you, but Cornmarket have a reputation for being expensive and as they're owned by Irish Life, you might end up with an Irish Life product.

Some of the following posters are brokers that contribute to this board for free. In alphabetical order ... @GSheehy (Gerard Sheehy), @LDFerguson (Liam D. Ferguson), @Marc (Marc Westlake), @Steven Barrett - Google any of them and you should be able to contact them in the real world.
 
You don't have to keep your AVCs for your public sector employment with Cornmarket. If you decide to follow Dave's advice and open your PRSA with a broker, you could ask the broker to set up an AVC PRSA for your PS earnings. This would likely cost less than Cornmarket.
 
Many thanks everyone. I appreciate you all getting back to me. I will study these options.
 
Dave Vanian said:
If your public sector income is less than €115,000 per year then yes, you can make contributions into a Personal Pension or PRSA separately in respect of your private income. Cornmarket can probably arrange this for you, but Cornmarket have a reputation for being expensive and as they're owned by Irish Life, you might end up with an Irish Life product.

Some of the following posters are brokers that contribute to this board for free. In alphabetical order ... @GSheehy (Gerard Sheehy), @LDFerguson (Liam D. Ferguson), @Marc (Marc Westlake), @Steven Barrett - Google any of them and you should be able to contact them in the real world.
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Apologies for bumping this thread but, Dave, would you mind clarifying the first line here....if I have both public and private sector employments and the public sector salary is greater than 115k then I cannot continue contributing to my private sector PRSA? Does it make a difference if my private sector employment is within my own limited company?
 
poorrelative said:
Apologies for bumping this thread but, Dave, would you mind clarifying the first line here....if I have both public and private sector employments and the public sector salary is greater than 115k then I cannot continue contributing to my private sector PRSA? Does it make a difference if my private sector employment is within my own limited company?
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For dual income like what you describe, for the purpose of personal contributions, you've used up your €115,000 salary cap in your pensionable public service job. You can make AVC contributions within usual limits in respect of this income alone.

You can't make personal contributions in respect of your private income. However, as it's set up as a company, your company can make employer contributions to a Master Trust or a PRSA.
 
Dave Vanian said:
For dual income like what you describe, for the purpose of personal contributions, you've used up your €115,000 salary cap in your pensionable public service job. You can make AVC contributions within usual limits in respect of this income alone.

You can't make personal contributions in respect of your private income. However, as it's set up as a company, your company can make employer contributions to a Master Trust or a PRSA.
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Thanks Dave, got it
 
Dave Vanian said:
You can't make personal contributions in respect of your private income. However, as it's set up as a company, your company can make employer contributions to a Master Trust or a PRSA.
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How would one determine what's appropriate here? Say 50k distributable, 10k salary, 40k contribution for example? Does it depend on external factors such as having that additional salary?
 
Itchy said:
How would one determine what's appropriate here? Say 50k distributable, 10k salary, 40k contribution for example? Does it depend on external factors such as having that additional salary?
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If it's a PRSA, employer contributions are unlimited. So once you're an employee of the company, the company can put any amount they like into a PRSA. Salary sacrifice is forbidden and the €2 million Standard Fund Threshold applies.

If it's a Master Trust, Occupational Pension Scheme funding rules apply - calculations based on salary, service and other pension benefits.
 
Dave Vanian said:
If it's a PRSA, employer contributions are unlimited. So once you're an employee of the company, the company can put any amount they like into a PRSA. Salary sacrifice is forbidden and the €2 million Standard Fund Threshold applies.

If it's a Master Trust, Occupational Pension Scheme funding rules apply - calculations based on salary, service and other pension benefits.
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Dave would you mind explaining the restrictions that apply with a Master Trust.....Recently my pension provider for my Ltd company changed everyone's PRSA to a Master Trust (it is 5% personal contribution and 5% employer). I am considering going full time with my company and was planning on taking a salary of 42k (no personal contribution) and then have the company contribute 58k to pension. If this is feasible does this also mean that if i retire on 42k salary that my final pension cannot equate to more than 2/3rds of 42k or would it be 2/3rds of 100k (total renumeration package)?
 
poorrelative said:
Dave would you mind explaining the restrictions that apply with a Master Trust.....Recently my pension provider for my Ltd company changed everyone's PRSA to a Master Trust (it is 5% personal contribution and 5% employer). I am considering going full time with my company and was planning on taking a salary of 42k (no personal contribution) and then have the company contribute 58k to pension. If this is feasible does this also mean that if i retire on 42k salary that my final pension cannot equate to more than 2/3rds of 42k or would it be 2/3rds of 100k (total renumeration package)?
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If your contractual salary is €100,000 a year then what you suggest is known as Salary Sacrifice and is forbidden by Revenue. I'd discuss this with the scheme's financial broker and company accountant before going ahead.

Leaving that aside, the answer to your final question is that the calculations would be based on €42,000 salary. The maximum of 2/3 final salary would require you to have at least 20 years' service if you're taking any other pension benefits into account or 40 years if not.

These are not small sums of money and there's a lot of rules applicable. I would make sure to get written confirmation from your financial broker that everything you propose is permissible and within limits before proceeding.
 
Dave Vanian said:
If your contractual salary is €100,000 a year then what you suggest is known as Salary Sacrifice and is forbidden by Revenue. I'd discuss this with the scheme's financial broker and company accountant before going ahead.

Leaving that aside, the answer to your final question is that the calculations would be based on €42,000 salary. The maximum of 2/3 final salary would require you to have at least 20 years' service if you're taking any other pension benefits into account or 40 years if not.

These are not small sums of money and there's a lot of rules applicable. I would make sure to get written confirmation from your financial broker that everything you propose is permissible and within limits before proceeding.
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Thanks for the reply Dave...Apologies I forgot to mention that I am currently taking a salary of less than 42k from the company as I am only part-time so strictly speaking would this still be seen as salary sacrifice if I have never earned more than 42k (albeit part-time)? I will definitely seek professional advice before making any move.
 
Revenue have this to say... "Any arrangement under which an employee waives an entitlement to remuneration or accepts a reduction in remuneration, in return for a corresponding payment by the employer into a pension scheme, is considered to be an application of the income earned by the employee rather than an expense incurred by the employer."

My interpretation of that is that you are waiving an entitlement to remuneration for your extra hours' work and as such this would be salary sacrifice. But please don't take my interpretation as gospel. Talk to an accountant who has full details of your contract in front of them etc.
 
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