PRSA scheme Vs. AVC's

[salsero]

Hi to All,

I'd really appreciate it if anybody can advise me WRT the following scenario:-

I am currently in an Occupational (defined benefit) scheme, whereas my wife has no pension provision through her employment. I wish to increase our pensions provision and accordingly have the choice of contributing to an AVC scheme through my employer, or establishing a PRSA for my wife.

My wife is likely to retire in approx. 10 yrs time, whereas I'm more likely to retire in 15 + years time. Early retirement is a possibility for me also in 10 yrs time, but only if we have an income coming in (e.g. HER pension!) prior to my "normal" retirement age. I would therefore prefer to go the PRSA route for her, rather than the AVC route for me. Here's the deal though - she is on approx. 30% less than me salary wise, but she also crosses an age threshold that facilitates a greater tax-allowable contribution from her (5% more than me) salary.

Q. Would a PRSA in her name be restricted to contributions limited by her salary, or can we "pool" our salaries and avail of her greater tax-free contribution possibilities ? Alternatively, can I claim some of her tax credits/relief, thereby putting her into the top bracket earlier (thereby getting tax relief at the top rate sooner..?).

Bottom line here folks is that relief at the standard rate of tax is of no real interest to us - it's gotta' be at the 41% rate !!

Many thanks in advance to any and all who can advise on this in any way.
Cheers !

 

[Guest126]

You cannot combine salaries for pension funding purposes - you are both "on your own" in that respect.

Sounds like you should make the AVC if you are the only one that will get the higher rate relief...

 

[clon]

If you are assessed as a married couple then the first €68k should be taxed at the standard rate ( your med expenses etc. can also be claimed at the top rate besides) , and you get the tax credits jointly, the tax credits don't inflate or affect your standard rate cut off point, it works bottom up.

As was stated, you can't pool contributions to your pensions, they are treated separately, it is normally advisable to work out how much in cash per year each of you could put to your AVC or PRSA and stay within the age limit, and see should this total be the same or less than the income you have above your standard rate cut off point, if so it's normally worth putting what you can afford into the pension