AVC query

D

DaveD

Registered User
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Based on the following information is there any scope for me to make AVCs?

54 years old.
Public Servant (university employee).
36 years service paying 1.5% salary per annum since 1986, Master Pension Scheme.
Max pension is 40/60ths of final salary.

At 58 I will have paid 40 years pension contributions so anything after that is of little benefit to me except for death in service benefit.
I could retire early at 58 but with a reduced pension, or defer this pension until 65 or anywhere in between. There is an optional lump sum available, which reduces the pension paid.

If I retire at 58 and take a reduced pension, lets say 30/60ths for arguments sake, can I make AVC's between now and then to avail of a lump sum (or increased pension? If I can, are there any potential downsides? Such as, in the event of change of mind and staying until 65, being in the position of having an overfunded pension.

Or if I retire at 58 and defer my pension until 65 can I make AVC so that I can take a lump sum in addition to the full 40/60ths pension?
 
You can only make AVCs while you are still employed. There is scope to make a large amount of AVCs even if you retire after 40 years service on full pension. You are allowed to make AVCs to cover the shortfall in spouses pension cover. Public service pensions only pay 25% of your salary as a widow's pension. The maximum spouses pension allowed by revenue is 50% of your salary. The AVCs can be used at retirement to purchase an annuity or an ARF. These can be in addition to your full public sector pension. Even if you are presently single you can still fund for the possibility of having a spouse or children after retirement.
 
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Points to consider alright, most which I hadn't though of, so many thanks. I've an AVC presentation from Mercers in a few weeks so I'll raise these points then.
 
Also bear in mind that if you can manage to retire at 58 and open an ARF you will be eligible for S class prsi contributions until age 66. These can be used to help to quality for a contributory state pension. In your case probably a pro rata pension, if you cannot manage to achieve 520 full rate paid contributions.Check your prsi contributions history at welfare.ie to see if you have any pre establishment A class contributions.
 
bstop said:
In your case probably a pro rata pension, if you cannot manage to achieve 520 full rate paid contributions.Check your prsi contributions history at welfare.ie to see if you have any pre establishment A class contributions.
Click to expand...
This is an important and little-known option that I've seen you highlight a few times which can be very lucrative.

Is there a key post on this? If not it would be worth doing one I think.
 
Thanks bstop, another terrific point to note! I’ve paid Class D contributions for 36 years but had some Class A payments before that, but probably only 50 weeks in total.
 
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