SSIA or AVCs to pension

M

micksey

Registered User
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I'm trying to get an answer to a query. Unfortunately I have not seen a similar question else where.
So here goes. When my SSIA matures I have two options.
I can put 7,500 Euro in to my pension to avail of the 2500 Euro government gift. Or I can add 7,500 Euro as an AVC and gain tax relief at 40%. Am I correct in saying that going the AVC route is a better option?
Also a second related question. The 2500 Euro, does this have to go into the pension? Or can it be used to reduce my income tax burden for the current year?

Thank you for you time in advance.

 
Hi

Im no expert, but from what you say above I think the answer to No 1 is clear - do the AVC at 40% tax break (eh, subject to double checking the costs associated with the AVC I guess).

As for No 2, I'm afraid you need to ask an expert - I had thought the 2,500 was a bonus which was also invested in the pension, from what I've read on the web etc ?

Cheers
G>
 
Yes indeed the EUR2,500 must be invested in your pension, plus you must leave it there for at least 12 months in otherwise revenue will claw it back.
 
Garrettod said:
Im no expert, but from what you say above I think the answer to No 1 is clear - do the AVC at 40% tax break (eh, subject to double checking the costs associated with the AVC I guess).
Click to expand...
Actually it would be 42% (2006)/41% (2007) tax relief plus 4% PRSI relief plus 2% health levy relief (the PRSI/health levy relief claimed separately from the tax relief) - i.e. 48% or 47% total relief.
 
Thank you all for your help. Looks like I'll not be accepting the "generous" government offer.
 
I think the general gist is that it may be generous for some low rate taxpayers but not for most high rate taxpayers...?
 
And it would be something to think about if you had already maxed out your AVCs for the year but had earned less than 50K gross in 2006
 
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