Would a last minute AVC work in my case (with added complication around divorce!)

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letitroll

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Hi All

Looking for some guidance before I go seek full advise on the matter but was just looking for a high level view of my situation and what might be the smartest move in terms of maximizing my pension benefits specifically the lump sum for the future. I'm looking closely at a PRSA AVC.

First the simple part:

I'm 62 year old in the public service. I have full service years and more done. Noonan's extension to the next June makes next June my expected retirement date.

My job itself involves shift allowances. I have a base salary plus this shift allowance. For illustrative purposes lets say my salary grade is 70,000e.........with shift allowance added in - on average I gross 85,000e per year

Question 1:

Will my pension lump sum & yearly payments be based of my final grade salary or will some allowance be made for the fact that my role involved shift work

Q2 - same as above really but thinking of a last minute AVC and lump sum. Is the max tax free lump sum 1.5 my base salary or is it 1.5 gross average over three years and therefore if a gap exists between what my DB schemes pays (if they use base salary) and the average gross figure can I plug this with an AVC

Q3 -

I've read somewhere that although there is a tax free lump sum limit. There an opportunity to go above this limit and have it taxed at 21%. In my case then(as 41% PAYE worker) would there be an opportunity to fund an AVC at a tax relief of 41% now and take it as lump sum at 21% next year??

Now the complications:

I was legally separated a number of years and as part of the agreement my ex-wife was granted c. 1/3 of my pension and 1/3 of my lump sum.

As the above 1/3 of my pension will not now accrue to me but rather my ex-wife does this open up an opportunity for me to plug this 1/3 "gap" in my lump sum with an AVC which I can draw down tax free

I guess my question is from pension / tax point of view will revenue look at that 1/3 of my lump sum that goes to my ex and not assign it to me for the calculation of maximum benefits?? i.e. will they discount this money as it will never go to me.

If the above is the case then a 1/3 gap opens up in terms of my maximum lump sum benefit and I could use an AVC to fill this in a tax efficient manner?

Finally any recommendations around a financial advisor who understands both public service benefit calculations and might also be familiar with legal separations etc as there impact on retirement etc.

Sorry for long post and thanks in advance for any guidance
 
I'm pretty sure the final pension does NOT consider shift allowances. The general rule is that you won't be doing shifts when you retire, so you won't be compensated for it in your pension!

Sorry, I can't help on the other queries.
 
They don't allow it in your pension but you can use it to boost your lump sum.

e.g. pensionable salary €50,000, actual salary €60,000

Tax free lump sum of €75,000. You can use AVC's to fund an additional €15,000 lump sum.

You need to read the rules though to ensure this is allowed.

The % in your PAO relates to a specific period of time and not for your entire working life. She will be entitled to 1/3 of the lump sum from period X to period Y (probably the time you were married).


Steven
www.bluewaterfp.ie
 
SBarrett said:
They don't allow it in your pension but you can use it to boost your lump sum.

e.g. pensionable salary €50,000, actual salary €60,000

Tax free lump sum of €75,000. You can use AVC's to fund an additional €15,000 lump sum.

You need to read the rules though to ensure this is allowed.

The % in your PAO relates to a specific period of time and not for your entire working life. She will be entitled to 1/3 of the lump sum from period X to period Y (probably the time you were married).


Steven
Click to expand...

Thanks for the info

In terms of the PAO and how that reduces my effective lump sum (by whatever % that is). Can I fill that "PAO gap" with an AVC also i.e. do you think that they will consider this lump sum as never acrueing to me therefore I can fund this with an AVC tax free
 
Right need to tidy up a few things...There are dozens of PS/CS schemes with various rules and some do allow for shift allowance if you are of a senior grade so it is unlikely that anyone here on AAM can tell you if your shift allowance will be taken into consideration when calculation your pension benefits. You need to get on to your payroll department and check this out with them for clarity.

I do not think that you can make up the difference in your TFLS as the benefits of the scheme are not transferrable i.e. you earned the 1 1/2 times TFLS and now your ex gets half of that so if you were able to fund the loss you would technically have funded 2 1/4 TFLS (hope that makes sense and I used 1/2 TFLS as the example for ease of math!) However if you ring Revenue Large Cases Department on 01-6131800 they will answer this question for you.
 
letitroll said:
Thanks for the info

In terms of the PAO and how that reduces my effective lump sum (by whatever % that is). Can I fill that "PAO gap" with an AVC also i.e. do you think that they will consider this lump sum as never acrueing to me therefore I can fund this with an AVC tax free
Click to expand...

No, you can't fill the "PAO gap". The lump sum paid to your ex wife is considered yours when it comes to calculating the maximum amounts payable.

And here's the kicker, that lump sum that your ex wife gets isn't counted at all when it comes to calculating what she can put into a pension.

Steven
www.bluewaterfp.ie
 
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