Hi there,
I am hoping for a second opinion re my mam's pension.
She is 57 working for the health service and has been advised to put money into an AVC to benefit from the tax relief because of her age etc.
She will get a small pension from the HSE, will get the state contributory pension and is looking to possibly invest in AVC's. She already invests in AVC but is not investing the max.
This is what she's been advised:
You are already saving €222.79 per fortnight (€5812.59 pa).
Therefore for last year and the first 6 months of this year you are allowed to pay a lump sum to an AVC of €10,578.25 for last year and €5289.12 for the 1st 6 months of this year. Total Euro 15,867.37. You will then get back from revenue a cheque of €7,563.27.
This means that you would have savings in your AVC of €15, 867 as well as getting your tax back of €7,563.27
Starting from July you can continue your AVC contribution of €222.79 per fortnight and if you pay an additional monthly premium in to your AVC where you saved the lump sum of €405.45 per fortnight it would actually only reduce your take home pay by i.e cost you €206 per fortnight. This is the maximum you would be allowed to pay in.
At age 60 you will then be in the position to pay in a lump sum again and or increase your contributions but this we can look at when the time comes.
If we assume that you pay in the lump sum of €15,867 now and continue your payments per fortnight at the amount of €405.45 to age 63 you would have saved close to €79,000 and it would have only cost you €38,000
That is a clear profit of €41,000. and thats not taking into account any increase in payment or additional lump sum payments.
Does this make sense? Is there any catches she should be aware of? Is it a wise move? What questions should we ask?
Many thanks
I am hoping for a second opinion re my mam's pension.
She is 57 working for the health service and has been advised to put money into an AVC to benefit from the tax relief because of her age etc.
She will get a small pension from the HSE, will get the state contributory pension and is looking to possibly invest in AVC's. She already invests in AVC but is not investing the max.
This is what she's been advised:
You are already saving €222.79 per fortnight (€5812.59 pa).
Therefore for last year and the first 6 months of this year you are allowed to pay a lump sum to an AVC of €10,578.25 for last year and €5289.12 for the 1st 6 months of this year. Total Euro 15,867.37. You will then get back from revenue a cheque of €7,563.27.
This means that you would have savings in your AVC of €15, 867 as well as getting your tax back of €7,563.27
Starting from July you can continue your AVC contribution of €222.79 per fortnight and if you pay an additional monthly premium in to your AVC where you saved the lump sum of €405.45 per fortnight it would actually only reduce your take home pay by i.e cost you €206 per fortnight. This is the maximum you would be allowed to pay in.
At age 60 you will then be in the position to pay in a lump sum again and or increase your contributions but this we can look at when the time comes.
If we assume that you pay in the lump sum of €15,867 now and continue your payments per fortnight at the amount of €405.45 to age 63 you would have saved close to €79,000 and it would have only cost you €38,000
That is a clear profit of €41,000. and thats not taking into account any increase in payment or additional lump sum payments.
Does this make sense? Is there any catches she should be aware of? Is it a wise move? What questions should we ask?
Many thanks