Additional Voluntary Contributions (AVCs)

If you are already a member of a company Group Pension Scheme, then you may be in a position to improve the benefits you receive on retirement by making extra payments, known as AVCs, through an AVC/PRSA.
The benefits of an AVC/PRSA:
  • Tax relief on your contributions.
  • Any investment growth is tax free.
  • Flexibility – it’s portable and you can stop and restart making contributions at any time without penalty.
  • You can take a tax-free cash lump sum. How you take your tax-free cash lump sum will depend on how you take your retirement lump sum from your occupational pension scheme. If you take 25% of your occupational pension scheme as a retirement lump sum, you can also take 25% from your PRSA AVC as a retirement lump sum.

AVCs - Neiland Financial Services
Your other option is to take a maximum retirement lump sum between your occupational pension scheme and PRSA AVC of up to 150% of your final salary. However, this depends on the length of time you have actually been employed. If this is less than 20 years or your leave employment before your normal retirement date, the retirement lump sum will be reduced.

Public Sector AVCs

Public Sector entitlements are quite complex.  There are four different pension calculations in operation in the Public Sector at the moment.  Which one applies to you, will depend on when you joined the Public Sector and if you have had a break in your service since joining.  However, regardless of what your pension calculation is, you still have the option to increase your retirement pot through AVCs to either retire early or have more money at your normal retirement age.  The same tax benefits outlined above will still apply to you and AVCs may be more cost effective for you than other retirement savings options.

What happens at retirement?

After you take your tax-free cash through one of the methods outlined above, the remaining balance can then be used to fund your retirement in the following ways:
A Pension for life (Annuity) – This is a secure retirement fund that guarantees to provide a regular income until you die. The benefit dies with you and you can’t pass it on to your estate.
A retirement fund you control known as an ARF (Approved Retirement Fund). This gives you control over your pension fund when you retire. Basically, you continue to invest your pension and draw down a regular income at the same time. The ARF is yours to invest and budget as you see fit (making sure it doesn’t run out) and you can pass it on to your estate when you die.