Single Pension Scheme Questions

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Godric

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Hello! I have been in the Single Pension Scheme since 2019. My Normal Retirement Age is 66 and I hope to retire at 60, when I will have had 12 years full time service. I have a separate Zurich pension pot from my previous employment estimated to be €700k+ by the age of 60. My last Single Pension Scheme Annual benefit statement (end Dec 2024) said I had earned €2.8k to my annual pension and €14.5k to my once off lump sum. I started an AVC in 2025 which with growth I estimate could reach €160k by age 60.

I have 2 questions:
1. I am hoping to use my lump sum from the pension scheme and the AVC to pay off the bulk of my mortgage (which I estimate to be €250k by age 60). Having read a few of the threads on here, I am concerned that I may not not be able to get the €200k maximum tax free lump sum if I needed it to pay off the mortgages because public sector lump sums seem to be capped. Can you clarify if I can?
2. Will the Single Scheme amounts above be actuarily reduced when/if I retire at 60?
 
All Defined Benefit pension schemes (public service or private sector) are limited to a maximum tax-free lump sum of 1.5 x final salary. The €200,000 limit is only relevant if 1.5 x final salary happens to be greater than €200,000.
 
Assuming that your Zurich fund is from a defined contributions scheme, you can take 25% tax free from it.

You can also get the maximum revenue allowed tax free lump sum (using some of your AVCs) from your current scheme.

The total combined tax free amount from both schemes cannot be greater than 200k.

Some of the extra 50k you require could come from extra lump sum taxed at 20%. This would be the case if your total revenue allowable tax free lump sum calculation, from your current employment, takes you over the 200k allowable limit.

You could also take an extra taxable (at your marginal rate) lump sum from your Zurich funds.

If your overall income at age 60 is less than the 20% tax band, you could set up an ARF and drawdown some extra 20% taxable income, to maximise your available 20% taxable band limit each year.

You could use this extra 20% taxable income to pay off any remainder of your mortgage in steps.

This is a good plan if you will be dragged into the 40% tax band at COAP claim age.
 
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