Moneymakeover AVC advice for public sector worker

P

Poppy18

New Member
Messages
3
Age:
48

Spouse’s/Partner's age:
N/A

Annual gross income from employment or profession:
€92,000

Annual gross income spouse:
N/A

Type of employment:
Public sector

Expenditure pattern:
generally save more than I earn

Rough estimate of value of home
€450,000

Mortgage on home
No mortgage

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month?
Yes

Savings and investments:
€105,000 savings (€55,000 in prize bonds and €50,000 in bank account)

Do you have a pension scheme?
Yes, public sector pension, started working in public sector in 2007. Also have a pension fund from when I worked in private sector from 2003 to 2007 (Zurich buy out bond value €44,000 in May 2025) and I paid in to AVCs from 2021 until 2023 (New Ireland Passive IRIS 2037 value in June 2024 €8,900 taken out with Irish Pensions and Finance), paused this when moving to a new employer.

Do you own any investment or other property?
No. Assumed inheritance at some point in the future of half share in my family home in Dublin which an elderly parent lives in.

Ages of children:
One child age 10

Life insurance:
Yes I have life insurance and income protection.

What specific question do you have or what issues are of concern to you?
I currently have approximately 15 years service in public sector (accounting for some unpaid leave I took since I joined). I plan to work for at least another 10 years, likely longer. I would like to have the option to retire as I approach 60 should I wish to when the time comes. I plan to restart AVCs in the coming weeks using one of the execution only providers. I intend to max out my AVCs.

I’d like to do whatever I can now so that I have the option to choose when to retire. I’ve looked at buying back years but the cost is high - approximately €200,000 to buy 8 years I would be short for full pension if I worked until retirement age.

My questions:

Is maxing out AVCs the best thing to do now given my retirement goals?

Using the Zurich Risk Profiler I’m looking at Zurich Prisma 4 or Prisma 5 for AVC’s, any advice on which to go for or other options worth considering given my circumstances?

Should I buy AVCs for last year before the deadline?

Should / Can I do anything with the Zurich buy out bond and New Ireland AVC such as incorporate them into the new AVC?

Also considering investing a chunk of my savings (approx €70,000) in an investment bond, is this a good approach or not given I will be maxing out AVCs? Other suggestions for investing this money with the goal of a decent return in about 10 years?
 
The main thing to check is whether a public servant hired in 2007 can retire with pension at age 60.

I don't think so?

It may have to be CNER?
 
Assuming that you cannot take your Public Sector pension until age 65.

If you decided to cease employment at age 60.

You could claim Pay related Jobseekers Benefit for 9 months.

You then have no income from age 60 + 9 months until age 65.

During this period you could live off savings.
You could also use your buy out bond to buy an ARF.
You could make drawdowns from the ARF tax free up to age 65.
If you drawdown a minimum of 5k from the ARF in the calendar year of your 63rd birthday and exhaust this ARF before age 65, you will qualify for Benefit Payment 65. This will cancel out your suplimentary pension between age 65 to 66 but will pay more than it.

If you maximise your AVCs now you will have the opportunity to open a new ARF at age 65.

From age 65 you will have your Public Sector pension benefits + ARF drawdowns + from age 66, an extra portion of the COAP. You will then be in a better position to survive with lower savings.
 
Last edited:
S class said:
During this period you could live of savings.
You could also use your buy out bond to buy an ARF.
You could make drawdowns from the ARF tax free up to age 65.
If you drawdown a minimum of 5k from the ARF in the calendar year of your 63rd birthday and exhaust this ARF before age 65, you will qualify for Benefit Payment 65. This will cancel out your suplimentary pension between age 65 to 66 but will pay more than it.
Click to expand...


Do you mean:

(1) work and contribute to PRSA-AVC until 60
(2) stop working at 60, stop contributing to PRSA-AVC
(3) convert PRSA-AVC into a Buy-Out bond - why do this?
(4) convert Buy-Out bond into an ARF before age 65
(5) take income from the ARF and accumulate SI contributions


I thought the AVC can only be matured when the main pension benefits start?
 
Poppy18 has a buy out bond valued at 44k.
I am suggesting that they use this to buy an ARF for drawdowns from age 60 to 65.
 
Last edited:
Buying AVCs is the most tax efficient way to save for a pension. By the time you reach 65 an AVC fund could potentially grow more than large enough to pay for you to buy back the years with extra to spare.

It's a dilemma of sorts whether to spend all that money on an "annuity" rather than an ARF but in some ways a nice dilemma that you have that option at all to lock in a 46k DB pension.
 
conor_mc said:
ETF’s are under the same Exit Tax regime as investment bonds, no?
Click to expand...

Key Post - ETF Tax Changes - Summary of current position

Previous thread: https://www.askaboutmoney.com/threads/is-the-41-exit-tax-soon-to-be-scrapped-michael-mcgrath-to-review.230266/post-1949220 Thread to discuss Life Assurance changes: https://www.askaboutmoney.com/threads/life-assurance-exit-tax-laet-changes.241236/ This thread summarises the...
www.askaboutmoney.com
 
Anyone know is it possible to get a stand alone AVC that’s independent from my pension and can be drawn down separately from pension (eg draw it down at age 60)?
 
You can only get this if you have earnings from another employer and this other employment is non pensionable. (There is no occupational pension scheme for the employment)

Your Zurich buy out bond can be drawn down at age 60.
 
S class said:
Your Zurich buy out bond can be drawn down at age 60
Click to expand...
Can't a BOB be accessed from age 50 in certain circumstances? E.g.:
www.royallondon.ie

Personal Retirement Bond (PRB) - Royal London IE

Here you'll fine information about our Personal Retirement Bond (PRB) product. This is also sometimes called a Buy‑Out‑Bond. It's an individual pension bond established in your name, that receives a single contribution into it, usually as a transfer payment from your current or previous pension...
www.royallondon.ie www.royallondon.ie
Once you’ve put money into a PRB you can’t withdraw it until you reach at least age 60. There are two exceptions - if you retire at any age due to ill health, or if you retire early you can get retirement benefits from your PRB from age 50.
Click to expand...
 
Yes that's possible.

Poppy18 is considering retirement possibly before age 60, so good point Clubman.
 
S class can I just clarify the following 'If you drawdown a minimum of 5k from the ARF in the calendar year of your 63rd birthday and exhaust this ARF before age 65, you will qualify for Benefit Payment 65. This will cancel out your suplimentary pension between age 65 to 66 but will pay more than it.'

So lets say I retire at 60 (pre-2004 PS). If I have a balance of lets say 10k from my AVC after maxing out my TFLS, in theory I could convert it to an ARF then withdraw a minimum of 4% each year until I reach 63 and then withdraw the balance (or at least 5k anyway), then I could be eligible for BP65 as long as the AVC funds have been exhausted before 65? I will likely claim JSB as soon as I am 60 (will be more than my supplementary) and then after 9 months I'll sign on for PRSI credits until 66. Would this have any impact on the above scenario for BP65?
 
Continuing to sign on for Jobseekers credits won't have any effect.


(Assuming that you already have at least 104 class A contributions.)
You can make 4% ARF drawdowns up to the calendar year of your 63rd birthday.

Then make a drawdown of minimum 5k in the calendar year of your 63rd birthday.

This ensures that you meet the rule of having 52 class S in this year.

You could exhaust your ARF during this year, or exhaust it at any time up to your 65th birthday.

This meets the rule to have ceased a self employment in the allowed time period.

By continueing to sign on for Jobseekers credits, you are also keeping open the possibility to qualify for BP65 under the class A rules. You would need 13 weeks of PAYE employment.

No harm in keeping all avenues open.

Irish Life offer ARFs from 10k. (The last time I checked this was a few years ago, so recheck this with Irish Life)
 
Last edited:
Thanks a million S class very valuable advice......the 13 weeks PAYE employment could be an issue though since I will be drawing supplementary pension which, as far as I know, is voided if employment is taken up. I don't know whether anyone on supplementary can work for a few months and then go back onto supplementary
 
You must log in or register to reply here.
Back
Top