Teacher with full pension at NRA - any point in paying AVCs??

[ThinKing]

My Girlfriends mother is approaching normal retirement age.
She will have a full pension at NRA.

My gf told me today that a Cornmarket rep was meeting with her mother this evening to discuss her options (My blood froze at the thought of her getting Cornmarket's "Independent" advice - as my gf as been a victim of their ludicrous charges in the past, but anyway).

Apparently 2 of the Cornmarket reps proposals were
a) to purchase income protection insurance to protect her Husband in the event of her death
b) to pay AVCs now to take advantage of the tax breaks available (or something along those lines)

The first question I said to ask was "How much does the consultation cost?" - as I could see a sneaky cornmarket fee of €800 dissapearing very easily.

Secondly, I told her not to go near (a) as it was almost certainly a highly overpriced insurance, especially considering that she's a member of the spousal protection scheme - Husband entitled to a 50% pension on her death I think.

Thirdly, I think that there is no point in contributing to AVCs seeing as she will be entitled to the 150% Lump sum and 50% pension anyway and cannot receive any more than this.

My question is would you say that my advice is sound?
Is there any possible tax benefit to paying into an AVC now? e.g. pay in with 40% tax relief, withdraw at 20% tax in a couple of years?
(Unlikely I know, I'm just trying to fully understand all of the options)

Many thanks,
TK

 

[mula]

Apparently 2 of the Cornmarket reps proposals were
a) to purchase income protection insurance to protect her Husband in the event of her death

ips wont protect her husband if shes dies it protect her salary in the event of illness

b) to pay AVCs now to take advantage of the tax breaks available (or something along those lines)

this depends on her current salary,her husbands income,rate of tax, non pensionable income etc

The first question I said to ask was "How much does the consultation cost?" - as I could see a sneaky cornmarket fee of €800 dissapearing very easily.

think is around the 800 mark taken from the first years contributions plus then 1% ded fee 5% contribution and 1%mgmt

Secondly, I told her not to go near (a) as it was almost certainly a highly overpriced insurance, especially considering that she's a member of the spousal protection scheme - Husband entitled to a 50% pension on her death I think.

ips not for husband its for her income so i dont know what they were talking about

Thirdly, I think that there is no point in contributing to AVCs seeing as she will be entitled to the 150% Lump sum and 50% pension anyway and cannot receive any more than this.

she can retire with a potential 100% of her salary as pension as she is married

My question is would you say that my advice is sound?
Is there any possible tax benefit to paying into an AVC now? e.g. pay in with 40% tax relief, withdraw at 20% tax in a couple of years?
(Unlikely I know, I'm just trying to fully understand all of the options)

if she is in the high tax bracket now and will move to the low tax bracket when shes retires then she could build a fund for a ARF and withdraw from it each year up to her cut off point for the high rate of tax thus making a few quid in the difference.
does she have any non pensionable income? if shes does then she can fund for 1.5 times the average of the best 3 years in her last 10 and withdraw it tax free

 

[ThinKing]

Many thanks for the reply Mula. It was quite interesting.

The clarification on the Income Protection Insurance confirmed my feelings on the matter.

I had read many comments to the effect that it was not possible to fund for more than 50% income (after 150% lump sum) but I was not aware of the difference for married people.
I can see that it would be worth her while looking more into setting up AVCs.

For clarification, her husband is retired and does not receive any pension other than the old-age pension (and possibly not even that?)
They do not receive any other income other than from her teaching role.
I'm guessing (based on looking at the teachers salary scale) that her income is of the order of €50,000 to €60,000 now.

I have looked at the advantages/disadvantages of using companies other than cornmarket for setting up AVCs. I can see that the main disadvantage would be having to claim back the tax refund at the end of the year, as opposed to getting the relief at source.

Otherwise I can imagine a disadvantage that my gf's mother would see is convenience (which cornmarket of course count on).
Would I be correct in assuring her that setting up e.g. an Eagle Star PRSA through a broker would be as straightforward as setting it up with Cornmarket?

In people's experience would all the companies offering PRSAs be pretty equal, in terms of, ease of dealing with them?
Do any of them, for example, specialise in the type of PRSA I'm talking about here? (Public pension-close to retirement age)