Teachers AVC Plan with Irish Life

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Bedlam

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At retirement date can I transfer my AVC to a PRSA having taken my entitlement to Tax Free Cash?

Any help appreciated


Bedlam
 
Why wait until retirement?

Irish Life are charging you 5% (?) per contribution (plus annual management charge) so why not stop contributing to your current AVC and take out a stand alone PRSA AVC at much lower charges?

At retirement you would likely want to transfer what remains of your fund to an ARF (having satisfied the minimum income requirement...should not be a problem if you have reasonable service).

Not sure how a PRSA has benefits over an AVC in retirement. What's your thinking?
 
Hi Oysterman

The thinking behind this is to avoid paying the imputed distribution charge of 5% on the ARF

I am retirng and am just wondering is it allowable to move my monies from the AVC to a PRSA

Thanks

Bedlam
 
To the best of my knowledge (but please do not rely on this), once you have retired and have reached the age of 60 you will be liable to income tax on imputed distribution of a PRSA AVC fund (although you wouldn't be if the PRSA was your only source of pension income).

If I'm correct in this, it's hard to see how you can avoid the tax charge given that I presume you will have a superannuation pension.

Have a read of

[broken link removed]

In addition, you need to be careful when moving AVC funds around that you don't suffer a market value adjustment, which would most likely negate any benefit you could secure by doing so.
 
Hi Oysterman

I am open to correction but I don't think the imputed charge applies to PRSA AVCs

Bedlam
 
Under current regulations, assets held in a PRSA (even where you have retired other pensions) are not subject to the 5% drawdown rules.
 
Conan,

if that is the case, they why do people convert their PRSA-AVCs to ARFs at retirement?

If they can avoid the tax on the 5% imputed distribution from the ARF by simply doing nothing and letting the PRSA-AVC continue paid-up, then why do people get ARFs??
 
If PRSA funds (or other eligible funds) are transferred to an ARF on retirement, then the individual must draw down a minimum of 5% of the ARF value each year and pay tax on same.
If however you decide to retain your funds in a PRSA (even where you have retired other benefits), you are not currently required to draw down 5% each year.

The reason why people might go for an ARF (with their AVC funds) is that they are perhaps receiving a pension/income from the main scheme and equally want to draw down an income from the AVC pot. If you are a public servant, with a Defined Benefit pension on retirement, and you also have an PRSA AVC fund, then you typically have 3 options in relation to the AVC pot:
1. Use the AVC pot to buy an annuity
2. Invest the AVC pot into an ARF (giving income flexibility etc)
3. Leave the AVC pot in the PRSA until age 75 (assuming you dont draw down an income)
 
Hi Conan

Thanks for this

Can you give me your opinion please on my original post please

"At retirement date can I transfer my AVC to a PRSA having taken my entitlement to Tax Free Cash?"

Bearing in mind it is an Teachers AVC Plan


Thanks Again

Bedlam
 
cONAN,

thanks for the info.

However, in the case that I'm familiar with (PS pension + AVC + PRSA-AVC), the AVC broker Cornmarket didn't suggest the third option.

The second AVC was not drawn down at retirement, waited for 1-2 years, at that stage the Eagle Star / Zurich staff mentioned something like:

"the Revenue don't like all benfits not being taken at retirement"

I felt there was pressure to convert the PRSA-AVC into an ARF.

Indeed, Eagle Star seemed a bit surprised that the PRSA-AVC hadn't been converted / transferred to an ARF at retirement.
 
Apologies, on mature reflection I overlooked that the OP was referring to an AVC PRSA.
If the PRSA is an AVC fund then the benefits must be taken at the same time as the main scheme. So in that case the options are:
- Use the AVC fund to maximise the retirement lump sum (particularly where the main scheme is not offering Revenue max lump sum)
- Use any balance to buy an annuity, or
- Invest the balance into an ARF

Apologies for the earlier confusion.
 
Conan
My original post mentioned that it was an AVC attached to my main Teacher Pension Scheme can this be transferred to a Vested PRSA

Thanks

Bedlam
 
Bedlam, You can't transfer your AVC to a vested PRSA. Your AVC has been set up under the rules of the main superannuation scheme and as Conan mentioned benefits must be drawn down at the same time as the main scheme - top up tax free lump sum/purchase service/balance in A(M)RF/annuity/taxable lumps sum.

There was an option a couple of years ago to delay drawing down benefits for a while (to protect those who wished to purchase annuities from being forced to do so in times of low interest rates). This option expired on 31 December 2010.

When you apply to the department to retire, part of the RET1 form requires you to make a mandatory declaration to Revenue in relation to your pension benefits and when you expect to become entitled to them.

I haven't experienced a situation yet where Revenue actively 'chases up' a client to draw down benefits, but that's not to say that it doesn't happen.

Regards,

Andrew
 
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