Thanks very much for your replies
@Early Riser .
Am I correct in saying then that there is no other way for me to benefit from the €2m SFT as I am on a DB ?
I'm effectively locked into the value of the DB pot and cannot avail of the 20% tax rate (no prsi, usc etc) on the first €300k after the €200k tax free limit on any other kind of lumpsum apart from the 120/80 that the DB gives you with full service ?
After reading the information that you and
@Conan have kindly shared earlier in the thread I am starting to think that an AVC could still be good value in my particular case, just that I would need to re-assess how I would utilise it.
In my case, when I am hoping to retire at 60, my pension would be our sole source of income until we reach age 65.
My wife has a small deferred DB pension that may be worth circa €10k at age 65. Her Executive pension would also mature at that point (we could possibly draw down on that earlier, I will look into what potential penalties there might be)
Under the current OAP rules (we are both A Class and will both have full PRSI credits) we would then get circa €28k state pension at age 66 (who knows what the age will be at that stage) So from 66 onwards it should be fairly well funded. The reason to look to retire at 60 though would be to travel a bit and enjoy ourselves when we are hopefully fit and healthy.
If I had a 200k AVC that i converted into an ARF at age 60, I think I would be able to draw down the following each year before hitting the 40% band
Jointly assessed :
Pension : €31k
Tax credits : €3,550 ?
Employee PAYE Credit ? €1,775 (not sure if you can still claim this if you are using your pension)
Taxable income :
I think we would be able to earn €49k jointly before moving into the 40% I think this would allow us to draw down circa €23k from an ARF without putting us into the 40% tax band.
I think it's worth looking at creating some income stream for my wife from age 60 because we could then increase the €49k cut off point by the amount of income coming in to her (until it reaches €31k whichever is smaller)