(b) I remember reading somewhere that the last contribution you make to a PRSA determines if it is an AVC PRSA or a regular PRSA. Can anyone confirm this? If so I could make my final contribution in years to come from my private sector income and break the link between my pension fund & my public sector employment thereby allowing me have a fund in excess of 500K.
Separate incomes means separate pensions. So if you have a private sector income (is it self- employed or as a Director of a Company?) then you can set up a separate PRSA or Company Pension. Whilst practically you could pay AVCs under your Public Sector arrangement from your private income, I don’t see any advantage. Having two separate pensions should allow you to get a larger combined retirement lump sum.
I don’t follow what you are getting at in (b).
Never heard of this. An AVC PRSA and a PRSA are two different products, even though they have similarities. So if you've been contributing to an AVC PRSA then these will always be AVCs to the main superannuation scheme and treated as such at retirement.
As you're 40 and earning €15,000 as your private income you can put up to 25% of this or €3,750 per year into a separate Personal Pension or PRSA, assuming that an Occupational Pension Scheme cannot be established in respect of this income. Be careful if the combined public and private sector incomes exceed €115,000 per year as this will trigger other limits.
Regards,
Liam
www.ferga.com
Thanks Liam. I actually did a trawl and think I have found the article. Its from an Irish Life AVC brochure p.16
[broken link removed]
WHEN AND HOW CAN I TAKE AVC BENEFITS? Usually you have to take your AVC benefits at the same time as the benefits from your main scheme. An exception to this is where you have been using a PRSA for your AVCs but your last contribution before you retired was an ordinary contribution (for example, as a self-employed person). Then your PRSA benefits will not be linked to your main scheme and you do not have to take them at the same time. In either event you may be able to take part of your fund as a retirement lump sum
PRSAs where your last contribution was not an AVC. You may take 25% of the fund in your PRSA as a retirement lump sum.
My gast is well and truly flabbered.That's the first I've heard of this. I'm not sure how it would work in practice. I must ask Irish Life. Sorry for wrongly contradicting you earlier.
It would be interesting to get an actuaries view on this. While a change in the individuals circumstances and then a contribution from a different source might change the status of the PRSA contract those AVC’s in the fund will always be avc’s in relation to that previous employment. I would always think this is case no matter how you mix the funds. Therefore when the main scheme is retired the avc’s would have to be retired?
Far be it from me to query an Irish Life publication.......but I have never heard of this facility. Hopefully Liam can clarify with Irish Life.
WHEN AND HOW CAN I TAKE AVC BENEFITS? Usually you have to take your AVC benefits at the same time as the benefits from your main scheme. An exception to this is where you have been using a PRSA for your AVCs but your last contribution before you retired was an ordinary contribution (for example, as a self-employed person). Then your PRSA benefits will not be linked to your main scheme and you do not have to take them at the same time. In either event you may be able to take part of your fund as a retirement lump sum
PRSAs where your last contribution was not an AVC. You may take 25% of the fund in your PRSA as a retirement lump sum.
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