Using AVC for lump sum but less than 20 years service

[poorrelative]

If a public servant has 20 years service upon retirement but 2 of these years are notional service, can they top up their TFLS to 120/80ths or does the notional service not count for the purpose of AVC top up?

 

[Dave Vanian]

Check the definition of pensionable salary for the particular public service scheme the person is in. Revenue maximum lump sum with 18 years' service is 99/80 of salary, assuming no other lump sums from other schemes. But that's 99/80 of actual full salary, not pensionable salary. So 99/80 of actual salary may leave room for AVCs.

 

[poorrelative]

Thanks Dave - will do

 

[stoves1]

Following on from above query , wife has been with the HSE for circa 20yrs and most of that has been a % of the week, asked for a calculation of service to date which comes to circa 12yrs, she is presently aged 66 and will probably work till 70 ( as enjoys it) salary is clerical officers scale circa 42k, where she gets circa 60%, €25k, would it be worth her starting an AVC in order to maximise her final lump sum, appreciate replies

 

[poorrelative]

I would say yes because she can top up her lump sum part at 80% cost (tax free) and then take 100% back in 4 years tax free. The amount she could put into an AVC to top up her lump sum will depend on her pensionable service when she retires and is based on the table here page 3

https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-07.pdf

With approx 14 years she could top up to approx 63/80 ths (would already have 42/80th without AVC contribution) - an extra 21/80th

 

[S class]

If she works there for 20 or more years, she will qualify for the 120/80 revenue maximum allowable lump sum. She can use AVCs to make up the shortfall from her HSE lump-sum.

The 12 years service calculation is an equivalent amount. It is the number of years she would have worked if she was a full time employee. The HSE tend to do their pension calculations in this manner.

When she retires it would be necessary to submit employment figures to the AVC provider. These figures should be her employment start date and her employment ceasing date. Also her final years pay and details of her yearly pay for the previous 10 years should be submitted. The AVC provider wil then be able to calculate the extra tax free lump sum she is entitled to.