I am a teacher and I am planning on CNER - age 57 or 58 in 4 / 5 yrs time. I will have approx. 37 yrs at 58.
I understand that if I have 40 years service I would get a tax free lump sum of 150% of my final salary.
If I retire with less than 40 years the Tax Free Lump Sum would be less than 150%.
My question is - can I make up the difference through an AVC. Or is the 150% tax free only possible with maximum 40yrs service?
Thanks - Sidzer
Not under CNER.The AVCs can be used to maximize your tax free lump sum to 150%.
am a teacher and I am planning on CNER - age 57 or 58 in 4 / 5 yrs time. I will have approx. 37 yrs at 58.
I am a post 95 pre 2004 pension holder.Are you a pre 95 entrant? If so teachers can retire early from age 55 once you have 33/34 years service without actuarial reduction.
Hi @Early Riser What happens where the person has less than 20 years service? So e.g. 22 years at NRA but wants to go 5 years early with 17 years service? I know that has an effect as well on the revenue lump sum. Could you clarify - maybe using the same example but for shorter service? ThanksIf you take CNER at 58 with 37 years service you lump sum will be reduced to about 96%. Let's say your pensionable salary is €80,000. With 37 years salary the lump sum at NRA would be €111,000 but this would be reduced to about €106,000 under CNER.
Revenue will allow you to use an AVC to top this up but, because you are retiring before NRA, they will not allow you to top it up to the full €120,000. I think the formula for the Revenue max in this case would be €120,000 * 37/39 = €114,000. So Revenue would allow you to top up by €8,000 from an AVC (114,000-106,000). 39 years being the years service you would have had if you had continued to NRA - 60)
Hi @Early Riser What happens where the person has less than 20 years service? So e.g. 22 years at NRA but wants to go 5 years early with 17 years service? I know that has an effect as well on the revenue lump sum. Could you clarify - maybe using the same example but for shorter service? Thanks
ThanksFor 17 years of service the maximum lump sum Revenue will allow at NRA is 90/80 of pensionable remuneration. Taking the same example of someone retiring on a salary of €80,000, the maximum lump sum they would allow is €90,000 (at NRA). If the person is retiring 5 years before NRA then this is reduced by 17/22 = €69,500.
The actual lump sum from the occupational pension would, I reckon, be about €46,200, when their actuarial reduction to 90.7% is factored in. So, in this example, the retiree could use an AVC to top up the lump sum by 69,500 - 46,200 = €23,300.
So my understanding is that then any remaining avcs could be used for an arf to be drawn down during those 5 years to fund going before the supplementary pension/coap. And this could top it up to a max of 2/3 of salary. Is that correct?Thanks
o my understanding is that then any remaining avcs could be used for an arf to be drawn down during those 5 years to fund going before the supplementary pension/coap. And this could top it up to a max of 2/3 of salary. Is that correct?
Thanks @Early Riser for that clear explanationIf you transfer the remainder into an ARF you can draw it down as you like (where it is taxed as income and subject to PRSI and USC). If you retire 5 years before NRA you could draw it over those five years if you so choose. You might want to watch yearly withdrawal amounts to avoid going into the higher tax bracket. You are not restricted to 2/3 of salary for this purpose.
It is the total value of your pension at retirement that is restricted (the combined value of the AVC, the lump sum and your annual occupational pension). If the value of funds in the AVC at retirement was to be too high you would be penalised. But in practice this is unlikely to be an issue for you.
@Early Riser,
Howdie - is your calc right?
I had understood that if someone has 22 yrs service at NRA and they retire early without retained benefits after 17 years, the TFLS upon earlier retirement is the lesser of:
1. 17/22 * 1.5
2. What 17 years allows on the uplifted scale.
(unless there are retained lump sum benefits elsewhere..'
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?