Lump Sum From AVC PRSA

[User1970]

Hi All

I understand if I retire with at least 20 years service from my employer I can receive a tax free lump sum of 150% of my Final Salary.

If my Employer is paying me less than that I can make up the difference via an AVC PRSA.

However if I plan to retire with 18 years service how do I calculate how much I can take from an AVC PRSA?

For example if I was to plan to retire with 18 years service on a salary of 64,000, Employer provides a Tax Free Lump Sum of 42,000.

I have an AVC PRSA of 150k approx. do I use SCSB or another Pro Rata method to calculate and is the 25% of PRSA relevant here?

Hope this makes sense.

 

[Early Riser]

I take it you are in a Defined Benefit pension? The top up to 150% of final salary (or 120/80) only applies if you are retiring at, or after, "normal retirement age" for the main scheme. Otherwise the limit is reduced (eg, if taking CNER in the public sector)). I also take it that the AVC-PRSA is linked to your current main scheme employment.

There is a sliding scale for less than 20 years service at normal retirement age. For exactly 18 years service it is 99/80 of final salary. See here : https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-07.pdf

 

[User1970]

Thank you Early Riser

NRA is 60 and I would be at that age when drawing down, yes Defined Benefit (Post 95 Public Sector).

 

[Dave Vanian]

...and is the 25% of PRSA relevant here?

No it's not. The 25% of PRSA is only relevant to PRSAs, not AVC PRSAs. The lump sum from an AVC PRSA is only the amount that will bridge the gap between the lump sum you're getting from the main scheme and the maximum that Revenue will allow for your salary and service.