This is just lazy advice. Suggesting that you will be taxed at 20% in 22 years time is poor. This guy is clearly a "salesman " not an advisor. If you are a D contributor and retiring on full pension then you have limited scope for AVCs. If you are an A contributor (in the "integrated " scheme) then you have much more scope for AVCs.spoke to.cornmatket last week and thr lad said not.to worry about it as I can revisit it years down the road and that by the time I retire I will prob only be paying 20% tax on arf and getting 40% relief on contributions
class AAre you paying Class A PRSI?
class A
Conan, I'm a Class A contributor. I agree. it seems that I don't need the avc product at all and wonder should I just stop contributing or reduce it to the minimum.This is just lazy advice. Suggesting that you will be taxed at 20% in 22 years time is poor. This guy is clearly a "salesman " not an advisor. If you are a D contributor and retiring on full pension then you have limited scope for AVCs. If you are an A contributor (in the "integrated " scheme) then you have much more scope for AVCs.
ya I know I could get better returns elsewhere but would feel better about reducing this debt downFWIW the mortgage would be my first priority in your shoes too.
If you are class A then you have considerable scope for AVCs . You can fund for the equivalent of the State Pension offset.Conan, I'm a Class A contributor. I agree. it seems that I don't need the avc product at all and wonder should I just stop contributing or reduce it to the minimum.
in your experience is there any benefit for me to continue with avc? I could put that few hundred a month into paying off my mortgage
what does this mean? sorry, excuse my ignorance.If you are class A then you have considerable scope for AVCs . You can fund for the equivalent of the State Pension offset.
thanks for this information. so I can contribute away without fear of over funding?As you're Class A PRSI your public service pension is reduced to take account of the fact that you should also receive the State Contributory Pension. So as Conan says you can use AVCs to increase your pension. So your AVCs are unlikely to be overfunding. Whether or not you should depends on your larger financial position.
Not that simple.thanks for this information. so I can contribute away without fear of over funding?
does it mean that when i so retire I can withdraw from avc pot upto the point of going into higher tax bracket? eg 10k from avc pot on top of my 30k pension.
thanks
OK. But what happens with the avc pot when I do retire. let's say it's 150k and I have my full pension. how do I utilise it? In your opinion is it stupid?Not that simple.
- Who knows what the tax rates will be in 22 years time (certainly not the Cornmarket guy)?
- if you try funding for the State Pension offset then on current rates that's equivalent to an AVC fund of over €300k.
- if you are happy to continue AVC payments, then you should review the numbers as you get closer to retirement age
- then you will have a better understanding of your occupational pension numbers, tax rates etc.
You will almost certainly not overfund.1. its very unlikely that I will overfund
Impossible to answer this. Noone can be sure what the tax bands will be in 20 years time. But even by today's standard it all depends on your total income in retirement (your occupational pension and State Pension - and any other income, if applicable) and, if a married couple, your partner's taxable income/pension.I can set up an arf and take out around 5% a year to bring up pension abit and stay under higher tax band
my wife is a sna with around 7 years service so far. my top pay scale is 56k before Allowances and overtime. my pension is expected to be approx 30k a year with a 90k lumpsum.You will almost certainly not overfund.
Impossible to answer this. Noone can be sure what the tax bands will be in 20 years time. But even by today's standard it all depends on your total income in retirement (your occupational pension and State Pension - and any other income, if applicable) and, if a married couple, your partner's taxable income/pension.
For example, if you were retiring at 65 with full service and a pensionable income of €120,000 it is likely that you would be paying tax at the higher rate on any any ARF drawdown. But if your pensionable salary was €60,000 it is more likely that you could drawdown at 20%. You don't give any indication of your circumstances or salary.
I take it that the €30k is inclusive of the State Pension, ie, an occupational pension of €17k plus the State Pension? Anyway, given those figures you should certainly have scope to fund an AVC with an expectation to be able draw down from it without hitting the high rate of tax. You would certainly be fine by today's standards, and likely to remain so unless bands change very dramatically. An AVC also allows some scope to consider early retirement should this be a consideration in the future.my wife is a sna with around 7 years service so far. my top pay scale is 56k before Allowances and overtime. my pension is expected to be approx 30k a year with a 90k lumpsum.
yes it is occupational pension plus state pension. if there is no worry of overfunding il continue with it as it beats investing in an etf outside of pension i.e deemed disposal.I take it that the €30k is inclusive of the State Pension, ie, an occupational pension of €17k plus the State Pension? Anyway, given those figures you should certainly have scope to fund an AVC with an expectation to be able draw down from it without hitting the high rate of tax. You would certainly be fine by today's standards, and likely to remain so unless bands change very dramatically. An AVC also allows some scope to consider early retirement should this be a consideration in the future.
Whether you choose to go the AVC route or concentrate on the mortgage is a wider question, but simply tax-wise the AVC should be a winner.
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