Teachers Pension questions

Discussion in 'Public sector pensions' started by Memento, Jul 31, 2009.

  1. Memento

    Memento Guest

    I am asking this on behalf of someone else so sorry if details are a little foggy. If you need any more information please let me know.

    Teacher who is due to retire in 5 years but have made AVC (Fund = 50,000) payments so that if they retire this year they will receive almost the full pension.

    He is trying to work out with the threat of taxation on the lump sum if retiring this year would be best.

    Can you please tell me how if his full Pension of around 34,000 is taxed and what his take home pay would be. He is married with no dependent children, is the sole income and is 59 years of age.

    Could someone please give me a break down of taxation and how much his take home pay would work out at here ?
  2. oysterman

    oysterman Frequent Poster

  3. Memento

    Memento Guest

    Thanks for that.

    Can anyone offer an opinion on if they think leaving is the smart move based on budget speculation ?
  4. petermac

    petermac Guest

    Can anyone tell me what deductions come out of a primary teachers pension cheque?
  5. Slim

    Slim Frequent Poster

    Tax, income levy and PRSI as far as I know. LAst budget left lump sums under €200k alone.
  6. Squaremile

    Squaremile Registered User


    It is unlikely that his lump sum would be affected because as Slim pointed out it is likely that there will be a €200k threshold before any lump sum is taxed. Therefore in my opinion it would not be a wise move to retire now on purely financial terms. Even if the lump sum were taxed the amount he would lose in lost income over the next 5 years (half his salary each year before tax) would be significantly more than his lump sum would be taxed.

    Based on the information that you provided, it may be beneficial for him to maximise his AVC contributions if he can afford to do so. The reason for this is that at retirement he will be drawing down money from the fund tax free to maximise his lump sum (if he has scope to do so), and if he transfers the balance into anApproved Retirement Fund (ARF) he can draw down at the lower rate on a significant amount each year. If he still has money in the ARF at 65 he will then be able to draw down tax free again within the €40k per annum exemption limit for a married couple. This assumes that his wife will not be in receipt of any income or pension.