AVC PRSA

Why should I top-up my Pension?

If your retirement benefits are less than the maximum allowed by the Revenue Commissioners you should top-up your pension to help provide for a comfortable retirement. This applies if you are:

1. In a Defined Benefit Pension Scheme or a Defined Contribution Pension Scheme and/or
2. Whether you are a Public Service employee or working for a company.

You may wish to top-up your pension because of:

Total Income:  Most pension schemes usually only take account of basic annual salary. Bonuses, overtime, and other taxable income you may receive are frequently ignored for benefit calculation purposes.
 

Years of Service: You may not expect to receive the maximum pension benefits due to missing years of pension scheme membership. You can use Individual AVC PRSAs to make up any difference between full service pension benefits and those based on shorter membership
 

Spouse's and dependant's Pension Benefits: You may use Individual AVC PRSAs to increase any spouse's or dependent's pension payable to the maximum allowed by the Revenue.
 

Recommended Retirement Income: The average contribution to a Defined Contribution pension scheme is typically 10% of salary. If you aim to retire on the generally recommended two-thirds of your final salary, you will need to pay more into your pension now.
 

Cost of Living: You may wish to provide for increases in your pension to keep pace with cost of living increases during retirement.

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What tax relief can I claim?

You can claim tax relief on your pension contributions up to 40% of your net relevant earnings, depending on your age. This means that for every €1 you pay, you could claim up to 41 cents* back in tax relief assuming you are a higher rate tax payer (20 cent if you pay tax at the standard rate of income tax)
 

If you're in a company pension scheme you will normally receive full income tax relief at source on your pension contributions.

It should however be noted that tax relief is not automatically granted - you must satisfy the Revenue requirements. In certain circumstances your contributions may have to be restricted.
 

*41 cents assumes you are a higher rate tax payer.  It is important to note that tax relief is not automatically guaranteed. You must apply to and satisfy Revenue requirements.

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If I am already paying into a pension plan, will I still get a State pension?

This will depend upon your individual circumstances. If you have made appropriate PRSI contributions, you will be entitled to get the State Pension (Contributory) in addition to the pension from your own pension plan.
 

If you have not made appropriate PRSI contributions, you may be dependent on a non-contributory pension. This will be means tested by the Department of Social Protection and may be affected by your own pension plan. Further information is available from the Department of Social Protection

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How flexible is a personal pension or PRSA?Suppose I want to take a year out or a career break or stop making contributions at any stage?

Most pension plans are flexible and will allow you to suspend payments if you need to, without incurring a penalty.
 

Check the details of your own pension with an Insurance and Investments Manager at your local Bank of Ireland branch. In addition, remember to review any additional benefits you have on your pension (such as life assurance) as these will continue to be charged to the fund.

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What happens to my pension fund if I die before I retire?

Your estate and/or dependants will normally benefit from the full value of your fund under a personal pension or PRSA. If you have life cover with your pension, the benefit to your estate and/or dependants may be increased.

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What can I expect to get from my pension when I retire?

The objective of a pension plan is to help provide you with a sufficient income when you retire. Key factors that will affect your pension fund include:

• The contributions you have made to the plan
• The performance of your pension fund
• The charging structure of your plan
• When you started your plan
• Annuity rates at retirement

It is recommended that you review your pension plan every year, as your income and financial circumstances may change from year to year. A pension plan is a long-term investment but taxation rules, economic conditions and pension legislation are changing all the time.

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What happens to my pension fund if I die in retirement?

The position of your pension fund will then depend on the income option you selected at retirement.
 

If you opted to buy an Annuity Plan, the pension will cease on your death, but your spouse and/our dependants may receive a pension depending on the annuity type selected by you at retirement. In some instances your pension will continue to be paid for a set period if you selected that option at retirement. However, in general no funds will be payable to your estate for the benefit of your dependants.
 

If you opted at retirement to transfer your retirement fund to an Approved Minimum Retirement Fund (AMRF) or an Approved Retirement. Fund (ARF), the balance of these funds, on your death in retirement, form part of your estate and/or can be  transferred to an ARF owned by your spouse. In order to avaul of an ARF or AMRF there are certain conditions that must be met.

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Can I have more than one pension?

You may contribute to several pension plans, but you will only be able to claim total tax relief up to certain limits.
 

You may not have a personal pension plan and be in a company pension plan unless the two plans relate to two separate and distinct sources of income.
 

Similarly if you are in a company pension plan (and have no separate source of earnings) you will only be able to claim tax relief on AVCs made to either the company pension plan or an AVC PRSA. In that situation, you cannot claim tax relief on contributions made to a PRSA unless you have a separate and distinct source of income.

http://personalbanking.bankofireland.com/pensions/arf/

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