Is it worth making an AVC to a Garda pension

I am not a pensions expert.

If you contribute €50 net now what tax relief will you get on that, are you a higher rate tax payer.

The investment gains oer the 30 years will roll up tax free.

That should be reason enough to contribute the €50 if you can spare it, after looking at house costs and children costs.

Who knows what the rules will be in 30 years time.

The money in the AVC will most likely be treated in a similar way to any other pension assets you may have.
 
There are a number of points to consider:
- Under Revenue rules, the max benefits you can get from an Occupational Pension (including any AVCs) is limited to
# a pension of 50% of final Salary , plus
# a lump sum of 150% of final Salary
- you are suggesting that that is what the Garda Scheme will provide. If strictly so, then you have no scope for AVCs.
However:
- the Revenue limits are based on Final Salary, which can include any non-pensionable income such as Allowances, overtime etc.
- so whilst your Occupational Pension benefits may be based on basic salary (is that correct?), you can invest AVCs to provide benefits based on other non-pensionable earnings
- clearly the most tax effective strategy would be to build up an AVC pot to equal 150% of any non-pensionable earnings, since you could take such as an additional tax free lump sum (based on current rules).
- any AVC fund in excess of the additional 150% would have to be used to generate a retirement income, and obviously such additional income might be taxable (depending on your overall income and tax thresholds at the time).

So if you expect to retire on “full benefits “ from the Garda Scheme and won’t have any non-pensionable income, then strictly speaking you cannot invest AVCs. But assuming you will have have some non-pensionable income, then that will allow scope for investing AVCs.
Perhaps you need to talk to whoever manages your AVC facility.
 
Conan said:
There are a number of points to consider:
- Under Revenue rules, the max benefits you can get from an Occupational Pension (including any AVCs) is limited to
# a pension of 50% of final Salary , plus
# a lump sum of 150% of final Salary
- you are suggesting that that is what the Garda Scheme will provide. If strictly so, then you have no scope for AVCs.
However:
- the Revenue limits are based on Final Salary, which can include any non-pensionable income such as Allowances, overtime etc.
- so whilst your Occupational Pension benefits may be based on basic salary (is that correct?), you can invest AVCs to provide benefits based on other non-pensionable earnings
- clearly the most tax effective strategy would be to build up an AVC pot to equal 150% of any non-pensionable earnings, since you could take such as an additional tax free lump sum (based on current rules).
- any AVC fund in excess of the additional 150% would have to be used to generate a retirement income, and obviously such additional income might be taxable (depending on your overall income and tax thresholds at the time).

So if you expect to retire on “full benefits “ from the Garda Scheme and won’t have any non-pensionable income, then strictly speaking you cannot invest AVCs. But assuming you will have have some non-pensionable income, then that will allow scope for investing AVCs.
Perhaps you need to talk to whoever manages your AVC facility.
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thanks for the advice.i appreciate it
 
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Conan said:
So if you expect to retire on “full benefits “ from the Garda Scheme and won’t have any non-pensionable income, then strictly speaking you cannot invest AVCs.
Click to expand...
This statement is misleading.
"Full benefits" from the Garda scheme only includes a widows pension of 50% of the members pension. You can make AVCs to fund for a widows pension of 100%.

See this thread...

"Can AVCs be made to make up for the 50% shortfall in widows pension for public sector workers."
 
Conan said:
the Revenue limits are based on Final Salary, which can include any non-pensionable income such as Allowances, overtime etc.
- so whilst your Occupational Pension benefits may be based on basic salary (is that correct?), you can invest AVCs to provide benefits based on other non-pensionable earnings
Click to expand...
Hi Conan. sorry, I meant to ask about this. how does an avc give benefits in relation to non pensionable earnings? eg overtime
 
Dublin85 said:
Hi Conan. sorry, I meant to ask about this. how does an avc give benefits in relation to non pensionable earnings? eg overtime
Click to expand...
Most DB schemes provide benefits (pension and lump sum) based on basic salary. But under Revenue rules, it is possible to calculate benefits on gross earnings (base salary plus any non-pensionable income). So if you have some non-pensionable earnings it is possible to use AVCs to fund benefits on such non-pensionable earnings.
The main requirement might be that such non-pensionable income will need to be in place in the years as you near retirement. Also such “fluctuating earnings” will need to be averaged over at least a three year period, before being added to your base salary for calculation purposes.
Example
Base salary at retirement €60,000
Other earnings (averaged over last 3 years) €10,000
So if you have full service, your PS pension might be €30,000 plus a lump sum of €90,000
So you could use an AVC pot to to provide full benefits on the additional €10,000 earnings:
- a lump sum of €15,000
- additional pension of €5,000.
This might require an AVC pot of c€140,000.

Hope this clarifies.
 
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