Maximum tax free lump sum??

M

mth

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1.5 times final salary subject to having the required pensionable service is often quoted as the max tax free lump sum that a retiring public servant can avail of. On Revenue site I cannot find what the required pensionable service is.

I am due to retire from the public service next autumn aged 61, with approx 29 years pensionable service, after having worked previously in UK .
If I remain in my employment until 65 I would have had approx. 33 years.
I have bought some additional years which amount to just over 3 years after actuarial adjustment since I will obviously not continue paying until 65.

I am considering purchasing an AVC to enhance my lump sum and this is where I have the problem.
I already received a small lump sum from my UK employment last year which I presume will have to be added to my lump sum here. Can anyone tell me in my case what is the max tax free lump sum I will be entitled to so that I know how much to invest in AVC
 
The lump sum is calculated as 3/80th of final salary per reckonable year of service, so it takes 40 years to achieve the maximum 120/80 - i.e. 1.5 times final salary.
 
Yes I realise that.
However at the moment I know what lump sum I got from UK.
I know what lump sum I will get here in the autumn.
What I really want to know is the max tax free lump sum revenue will allow me so that I can purchase the difference between the two.
1.5 times last pensionable salary is often quoted but is that the case for everyone even if they were incapable of having 40 pensiobale years service? Perhaps I am not explaining my query very well.
 
My understanding is that your UK lump sum has no influence on your Irish entitlement. Talk to an independent ( and dependable) financial advisor on where to invest for your AVC. Are you intending it to mature when you are 65 or next Autumn? That will influence your options.
 
I am not sure. I wont actually need it immediately. Will the three years make such a difference ??
I was only going to do it because of tax.
With regard to the UK pension I am already declaring this to Revenue and they are not taxing the lump sum part of it so I assumed it would be added to my lump sum here.
And the most important question of all, how do I decide on an independent (and dependable) financial advisor??
 
If all you're looking for is details of how to calculate your maximum permitted tax free lump sum, you should not need to incur the expense of going to an independent financial advisor.

From the information you give, the lump sum you will be able to fund through AVCs is as follows:

(a) 1.5 times your final remuneration

less

(b) the tax free lump sum you will receive from your current scheme

less

(c) the tax free lump sum you received from the UK scheme.

Final remuneration can include all earnings from your employer including BIK, but fluctuating earnings will need to be averaged over a period of 3 years. You can choose a longer period than 3 years if this will produce a better result.

Your employer's HR/pensions department should be able to tell you how much (b) is likely to be.

If you are in the public sector, you may not have a choice regarding AVC provider. However, if you invest your AVCs in a cash fund, you should be able to target the amount required to a reasonable degree of accuracy, but watch out for the charges applying as these can be quite high.

Hope this helps.

Homer
 
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