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Single Premium AVCs

What is a Single Premium or 'Last Minute' AVC?

A Last Minute AVC or a Single Premium AVC is a lump sum payment into your AVC before you retire to maximise your tax free lump sum and to avail of any tax relief available to you.

There are many reasons why a Last Minute AVC might be right for you.

For example:

  • If you have less than full service
  • If you have any non-pensionable earnings
  • If you have received a reduction in pay in the last number of years.

Please note: A Last Minute AVC must be paid prior to your actual retirement

How do I benefit?

At retirement you will be entitled to a tax free lump sum as a result of your service and salary, as part of your Superannuation Scheme. However, due to many different reasons this may be less than the maximum tax free lump sum Revenue allows you to fund for. If there is a shortfall between your Superannuation and Revenue entitlements then here is where you can take advantage of a Last Minute AVC. Your Cornmarket consultant will calculate your scope for a Last Minute AVC using either the Superannuation Maximum formula or the Revenue Maximum formula depending on your personal circumstances i.e. how much money you have available to invest, years of service etc.

Superannuation Maximum

Superannuation Maximum estimates the shortfall in your actual lump sum and the maximum you could have received from Superannuation (i.e. with 40 years or more of service). If using the Superannuation Maximum formula, the following will be taken into account:

  • Short service: service between 20 and 40 years
  • Normal and Ill-health retirement.

Revenue Maximum

Revenue Maximum estimates the shortfall between your Superannuation and Revenue Maximum tax-free lump sum entitlements at retirement. Revenue Maximum entitlement takes into account other elements which Superannuation Maximum does not. If using the Revenue Maximum formula, the following will be taken into account:

  • Dynamisation (any pay reductions you may have had within the last 10 years)
  • Non-Pensionable Earnings
  • Cost Neutral Early Retirement
  • Less than 20 years’ service
  • Greater than 40 years’ service and over age 60
  • Marginal tax paid.

Example

  • You invest €12,500
  • PLUS fee and contribution charge of €1,045*
  • LESS tax relief (assuming 40%) of €5,418
  • You actually only pay €8,127
  • EQUALS profit of €4,373 *€525 fee plus 4% contribution charge. An annual management charge will also be applied by the insurance company. The typical charge is 1% per annum. Please note: The charges above are correct for most of our AVC Schemes. Actual charges for your AVC Scheme will be confirmed by your consultant.

Does it apply to me?

If you do not already have an AVC which will maximise your tax free lump sum on retirement then a Last Minute AVC may indeed apply to you

Is my investment secure?

No. Unfortunately there are currently no funds available to the AVC which have a guarantee not to fall in value. Most Last Minute AVCs are therefore invested in a Cash Fund which should minimise the risk but cannot offer 100% security. The short term nature of these investments should also be taken into account as most Last Minute AVCs are drawn down within two months of retirement.

Warning: The value of your investment may go down as well as up.

Warning: This product may be affected by changes in currency exchange rates.

Warning: If you invest in this product you may lose some or all of the money you invest.

Warning: If you invest in this product you will not have any access to your money until you receive your Superannuation Benefits.