Increasing AVC Contribution Levels - Things to Consider?

[Starting Out]

Hello,

I have a query with regard to my current contribution levels towards AVCs in my occupational pension plan.

Every pay week I currently make a contribution equal to 5% of pensionable salary towards our company’s defined benefit scheme. This is a private sector defined benefit scheme with no allowance for cost of living increases post retirement. For this reason I decided late last year to begin contributing AVCs on top of my standard contributions. I am currently contributing €35 gross each week as AVCs (a little less than the 5% I'm already contributing). I also probably will not be with my current employer for the rest of my career and don’t anticipate being able to avail of a defined benefit scheme forever so this is another reason I’ve decided to start AVCs when I am able to afford to.

I am now considering increasing my level of AVC contribution to mitigate against the risk of tax relief changes in the forthcoming budget. Whenever I check about establishing AVCs however it references getting further financial advice. Up to know I have not done this but decided to check with this forum for any thoughts / advice. I am wondering if there is anything else I should be aware of before deciding to increase my contributions?

I realise this level of AVC is high considering my age but I am in a position currently where I can afford to make these contributions so would rather avail of any higher levels of tax relief while available and reduce the cost of funding this. Based on my age (27) I can contribute up to 15% of this as pension this year.

Thanks,
Starting Out

 

[StevieC]

Your risk adversity will dictate the type of fund you should invest your AVC's in. Talking to a qualified financial adviser will help you establish this.

Also they can advise you on the charging structures of the companies that offer these products so you get the best value for money.

They can also show you the past performance of companies, while this wont guarantee future performance, it will give you an idea of which companies have had terrible performance over a number of different time periods in the past.

You are making the right choice to invest in AVC's now as there is great value at this time and its still a tax efficient way to provide for retirement.

It is worth getting independent advice from a reputable broker though and not just buying a product from the first snake oil sales man who crosses your path.

 

[Starting Out]

Thanks StevieC,

At the moment my choice for my regular contributions has been the Irish Life Concensus fund. This choice was predominantly made for minimising my annual management costs.

My options (through my employer) are between the Irish Life Consensus fund, Cash fund, Fixed Income fund, Global Access Managed fund and a 50:50 equity fund, all with Irish life. The 50:50 fund is 100% in equities, half in Euro zone and half outside the Euro zone.

I'm less concerned with the choice of provider rather than if there was anything else I should consider before increasing my AVC contributions. I will check through the providers seperately.

You're suggesting an increase in contributions as a good thing based on current market value opportunities and tax relief benefits. Are there any other thoughts out there?

Thanks