AVC's

C

Confused

Guest
Can someone explain to me how AVC work. I am trying to confirm that I will receive tax relief at the higher rate (as I am in the higher rate band). So that then means that it will cost me €53 to invest €100 into my company pension policy. This is working on the assumption that I have not passed my 15% Net Relevant Earnings threshold.
Any help/guidance would be appreciated !
 
AVCs

You can get tax relief (& PRSI & Health Levy relief) at your marignal rate of tax if deducted from your earnings by your employer.

Overall limit on you combined normal contribution (if any) to your employer's scheme and AVC is related to your age : 15% < 30, 20% 30-39,25%40-49, 30% 50+.

But one word of caution ...you can only do AVC if your employer's scheme doesn't provide full maximum approvable benefits ...don't over fund on AVCs as if you do you can't get a refund and your employer's benefits are reduced instead ...so you end up saving your employer!
 
Explanation please

"you can only do AVC if your employer's scheme doesn't provide full maximum approvable benefits ...don't over fund on AVCs as if you do you can't get a refund and your employer's benefits are reduced instead ...so you end up saving your employer! "

Could you clarify this further please.
 
Re: Explanation please

Eh,

Does that mean marginal rate of tax - as in 20% rate, rather than 42% (assuming we are paying the higher rate based upon annual earnings etc) ?

I had also heard elsewhere that one can "over fund" their pension - so personally, while the AVCs are attractive given the tax relief, they are possibly not the best investment at this time in my own life (though this could change in 5 years time etc)

Regards

G>
 
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