max lump sum with AVC

[paulyt33]

Hi , First time poster I hope I get it right ,

I'm a public servant who joined late , I have to retire in 4yrs having completed 14 yrs , my question is ,
Can I top up my lump sum with my AVC to bring it to 150% ,ie my finishing salary will be 60k which should give me a maximum Revenue approved tax-free cash entitlement of 90k ,
as I will have only served 14yrs my actual tax-free cash lump sum provided for within the Superannuation Scheme will be approx 32k ,
so can I than add an AVC sum of 58k to this to give me a tax free lump sum of 90k ,

Again I hope I've made myself clear ,
thanks Paulyt33

 

[Slim]

Hi Paulyt33. Welcome to AAM. I'm pretty sure you can take out an AVC or PRSA. It may depend on your previous work pattern, i.e. have you a pension/lump sum coming from another employment? Total lump sums will determine whether or not you can add more tax free. You may be able to purchase 'Notional Service' from your employer to boost your pension/lump sum. You need to check that with your Superannuation section. Many public servants use Cornmarket to take out AVC/PRSAs. They do not have a great reputation(service/fees) and I have not dealt with them yet(I'm waiting 5 months for them to call me back on a query) but they do specialise in public sector pensions. You need to check with your pension department asap to get the ball rolling and spread the cost of Notional Service over the longest period possible. Best of luck. Slim

 

[Early Riser]

I have no experience of this but looking at Chapter 7 of the Revenue's Tax and Duty Manual ([broken link removed] ) it seems that with 14 years service the Maximum lump sum you are allowed is 63/80 of pensionable salary (ie, €47250). Your €32k from the Superann would be included in this. Open to correction. Rest of AVC pot can be transferred to ARF/AMRF. Table extract:

Maximum Lump Sum Benefits
7.2
Lump sum benefits greater than 3/80ths of final remuneration for each year of service
may be given on retirement at NRA in accordance with the table set out below
provided that the aggregate of the value of non-pension retirement benefits in
respect of service with the current employer and any retained benefits does not exceed
1.5 times final remuneration.
Years of Service - Eightieths of final remuneration
9 - 30
10 - 36
11 - 42
12 - 48
13 - 54
14 - 63
15 - 72
16 - 81
17 - 90
18 - 99
19 - 108
20 or more - 120

Just to add - if you have any previous public sector service which wasn't pensionable, check if if you can buy it back now. This is cheaper than notional years and and has no expensive commissions(AVCs).

 

[Steven Barrett]

With less than 20 years service, you can't get 150% tax free lump sum. Contact the pensions dept and ask them what is the maximum tax free lump sum you can have under Revenue rules and fund for that.


Steven
www.bluewaterfp.ie

 

[Conan]

As Steven points out, with only 14 years service you are limited to 63/80ths of a final Salary. But remember:
- for this purpose, Final Salary can be your gross taxable earnings at retirement (including overtime, any allowances, bonuses etc)
Your scheme may provide you with a benefit (pension and lump sum) based on a different definition of Salary. But Revenue rules allow benefits to be based on a couple of different definitions.
So what to do:
- find out exactly how you're Scheme lump sum will be calculated
- find out if any of the Revenue definitions of Final Salary will give a higher figure
- work out any shortfall (63/80ths of any difference in Salary)
- then decide if it is worth contributing AVCs to bridge the gap.

 

[Earl Grey]

[2012.] [ Public Service Pensions (Single Scheme No. 37.] and Other Provisions) Act 2012. (b) as Judge Advocate-General appointed pursuant to section 15 of the Defence Act 1954, in a public service body which is declared in the conditions of service attaching to the position, post or office to be a pensionable position for the purposes of the Scheme or which is stated in a written offer of appointment to the position, office or post to be a pensionable position for the purposes of the Scheme; “pensionable public servant” means a public servant who— (a) is employed in a pensionable post by a public service body, or (b) holds a pensionable office or other pensionable position in a public service body; “pensionable remuneration”, in relation to a Scheme member and in respect of a pay period or a series of pay periods, means— (a) basic pay (excluding overtime), (b) allowances to which section 11 relates, and (c) emoluments to which section 11 relates,