Important points to consider before you increase your AVC contributions

Important points to consider before you increase your AVC contributions

  • Your new AVC contributions will be invested using the same investment strategy/funds as your current AVC Plan.
  • If your AVC is with Irish Life then your new ‘projected fund at retirement’ will be reflected in your next AVC Benefit Statement. As there are certain Revenue regulations which govern how you can use your AVC Plan to buy benefits when you come to retirement, please make sure that you read your next AVC Benefit Statement carefully to ensure that your AVC Plan will deliver the benefits you are targeting for it.
  • The value of your AVC Plan can fall as well as rise in value and may at any time be less than the amount invested.
  • If you’re anticipating retiring within the next 7 years you need to consider carefully whether your AVC Plan top-up will represent value for money given the relatively few years remaining to retirement.

Are there limits to the amount I can claim tax relief on?

Yes. The Revenue will allow full tax relief on Pension contributions up to the limits set out below. This limit rises over the years so that by age 60 a member can claim relief on up to 40% of salary. This overall contribution is subject to limits set by the Revenue and is calculated as a percentage of annual salary. The percentage allowed for tax relief takes into account contributions to the Superannuation, Spouses’ and Children’s, Notional Service Purchase, and the AVC Schemes, etc.

The Pension Related Deduction is not taken into account when calculating the percentage allowed by Revenue.

  • Up to 29 years of age: 15%
  • 30 up to 39 years of age: 20%
  • 40 up to 49 years of age: 25%
  • 50 up to 54 years of age: 30%
  • 55 up to 59 years of age: 35%
  • 60+ years of age: 40%

Maximum salary of €115,000 allowed for tax relief purposes

Important Note

Should your circumstances have changed since you first joined the AVC Scheme, this may affect your options at retirement (e.g. what proportion of your AVC Plan you can take as a tax-free lump sum, what proportion you can invest in an ARF etc.). If any of the following apply to you, we would strongly recommend you arrange a Retirement Planning Consultation rather than increasing your AVC contributions on a 'No Advice' basis:

  • Revised your anticipated retirement age.
  • Taken a career break.
  • Gone job sharing or reduced/increased your hours.
  • Decided to buy back years through the Purchase of Notional Service Scheme, etc.
  • Decided to retire under Cost Neutral Early Retirement.

There is no fee for the Retirement Planning Consultation.

The tax information contained herein is based on Cornmarket's understanding of current Revenue practice as at November 2018 and may change in the future.