Questions on refund of contributions on leaving pension scheme

[polar]

I left my private sector job near the end of 2010 with 22 months' contributions and AVCs made to the company's defined contributions pension scheme. I had had a PRSA before that, but stopped contributing to it when I joined the company pension scheme.

As I have not moved to another job, I cannot transfer my contributions to another employer's pension scheme and as their value is over €10,000, I would need to get an actuarial certificate to transfer them to my PRSA, so I have opted to take a refund of my own contributions (I don't get to retain the employer's contributions because I stayed less than the necessary 24 months).

Two questions, then, on this situation:

1. I was on the higher rate of tax, so my contributions allowed me tax relief at that rate, but the pension scheme tells me that the refund made to me will be net of a 20% tax rate. I believe this is correct, though it seems inappropriate, but please contradict me if I am obliged to contact the Revenue Commissioners to pay more.

2. As all my pension contributions for 2009 and 2010 are being refunded, does that mean that I could therefore put a lump sum equivalent to 20% of my gross pay for 2010 into my PRSA? And if so, would I be entitled to the full tax relief on it?

 

[TheFatMan]

1. Yep thats right 20% flat rate of tax paid on pension withdrawls. No need to contact Revenue.

2. Yes would be my understanding as long as you had income in 2009/10

 

[Baracuda]

.

As I have not moved to another job, I cannot transfer my contributions to another employer's pension scheme and as their value is over €10,000, I would need to get an actuarial certificate to transfer them to my PRSA, so I have opted to take a refund of my own contributions (I don't get to retain the employer's contributions because I stayed less than the necessary 24 months).

I think that you may have got some of your info wrong. You can transfer the value into a PRSA and you do not need an Actuarial Cert to do this, the receiving PRSA needs a comparison cert between Occ and PRSA which can be done up by any pension advisor. The 10K limit that you mentioned relates to when a scheme makes the member transfer out of the scheme if the scheme is not being wound up, in this case the trustees needs approval from the pensions board.

With regard to your second question; you cannot back date a PRSA/PPP contribution to a previous tax year and claim tax relief for that year, this can only be done in the case of an AVC.

 

[polar]

Thank you both for your input. It was the broker who told me I needed an actuarial cert, so it seems they misinformed me.

I think that as I cannot get the tax relief on putting the money into my PRSA, either for last year, when I had an income, nor for this year when I don't, I may as well keep most of it in savings for the time being.