Contribute to PRSA after (but in the same year as) retiring ?

H

hamsterwheeler

Registered User
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Hi -
I am planning to take early retirement at the end of March 2027.

I'm 57.
My current employer operates a DC scheme, where I am participating with the mandatory 5% (and employer matches). The scheme allows AVCs.
I also have a couple of 'legacy' PRSAs from previous years.

I want to make maximum AVC contributions later in 2027 (both for income tax year 2027 and income tax year 2026), to:
- get the Income Tax relief,
- help make the household eligible for SUSI grants for academic year 2028/29.

my questions:
May I make AVC payments to one of my 'legacy' PRSAs* later in 2027 (after I finish up at my current employer and ride into the sunset :cool:) ....
1) in respect of tax year 2027 ?
2) in respect of tax year 2026 ... as long as I pay before Oct 31st 2027 ?
3) If (say in Q2 2027) I also convert my current employer DC scheme into an ARF .. take the 25% TFLS and start withdrawing from it ... may I still make those AVC payments for 2027 and 2026 later in 2027 ?

I see references to 'AVC PRSAs' on this site ... this is not 100% clear to me:
4) does it matter here whether my legacy PRSAs were set up as 'AVC PRSA', and how can I see if they are AVC PRSAs linked to a particular employment ?

Note that my two PRSAs have been moved from the original provider to a new provider, and in the process they were rebalanced (the total stayed the same, but PRSA A transferred some funds to PRSA B). It is hard to see that they should now be linked to any historical employment ?

I think the answers are 1) yes, 2) yes, 3) yes and 4) no (any PRSA will do).

*: yes, I could of course simply pay AVC into the employer's scheme before I finish - but cash flow planning makes it preferable to pay it to a PRSA later in 2027.

Thank You in advance - I much appreciate the advice on this forum.
 
Note that you should in principle be able to apply for SUSI for 27/28 via a change in circumstances due to retirement. They should calculate your income after retirement and pro rata adjust that to a full calendar year. Your 2027 income before retirement would be irrelevant.

Be aware that SUSI will take into account part of any lump sum in the relevant year divided by the number of years of contributions to the corresponding prsa. If you don't have a small prsa you could perhaps split it and retire it in chunks.
 
I think you would only be able to get tax relief by making avcs into your DC company pension and that they would have to be made before you leave that employment.

Instead of turning your DC pension into an ARF you can turn it into a Prsa as a leaving service option after you have left that company. This should allow you to split the prsa into multiple parts and to vest those at different times...which is very useful for tax planning purposes.
 
Gazzar said:
I think you would only be able to get tax relief by making avcs into your DC company pension and that they would have to be made before you leave that employment.
Click to expand...
Or to an AVC PRSA but not a regular PRSA including any of your existing policies.
Gazzar said:
Instead of turning your DC pension into an ARF you can turn it into a Prsa as a leaving service option after you have left that company.
Click to expand...
Won't that require a Certificate of a Benefits Comparison? Which may cost a few grand?
 
ClubMan said:
Won't that require a Certificate of a Benefits Comparison? Which may cost a few grand?
Click to expand...

I believe it would need a COB, probably still worth if the pension pot is large enough.

Main benefits

1. Avoid RMDs before age 75, especially if they push you into a higher tax bracket.

2. Tax free inheritance of unvested PRSA to spouse before age 75

3. Lump sum continues to grow tax free inside the unvested prsa until age 75
 
@hamsterwheeler
  • You cannot contribute an AVC after you've left the employment.
  • You can only contribute an AVC to either (a) the AVC facility in your DC scheme or (b) to an AVC PRSA of your own choosing. The AVC PRSA must be set up for AVCs related to this employment only. So even if you had a legacy AVC PRSA that you set up in a previous employment, you cannot use that to make an AVC related to a different employment. And legacy "ordinary" PRSAs are definitely out. It's something that bears repeating - an AVC PRSA and a PRSA are two very different products, despite similarities.
 
@ Dave Vanian, just to be clear, if the op leaves employment at end of March 2027, payment to an AVC PRSA for tax year 2026 and 2027 needs to be made before 31 March 2027?

Similar situation for myself.
 
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