AVCs can be a tax-efficient way to top up your pension. When you retire, the funds invested in your AVC can be used to bolster your pension benefits, subject to Revenue rules.
AVCs
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What are AVCs: Additional Voluntary Contributions (AVCs) are a way to make additional contributions towards your retirement benefits when you are already paying into a pension scheme.
When should you consider starting an AVC? If you want to be able to retire before you are 66*
Why choose AVCs over a regular savings account? Tax Relief, Control, Early Retirement Options, Tax Free Growth
How can you use your AVC? Well, that depends on your circumstances....
AVCs
When should you consider starting an AVC?
- If you want to be able to retire before you are 66 (current State Pension Age, likely to increase in future).
- Once you are in a financial position to regularly contribute to a policy.
- You want more income in retirement.
- If you want to maximise your state pension benefits.
- If you want larger tax free cash at retirement
Why choose AVCs over a regular savings account?
- Tax Relief.
Assuming you pay 40% tax, it will only cost you €60 to save €100 into your AVC. A portion of your AVC might be withdrawn tax free while the balance is subject to income tax to potentially the maximum tax you will pay on withdrawal is 20% income tax plus USC plus PRSI while you are receiving 40% relief on all contributions. - An AVC also allows you to maximise the tax-free lump sum you receive at retirement. With tax relief and investment growth, it is quite easy to double the amount you invest.
- When retiring, you can choose the pension benefits that you want. These include, tax free lump sum, approved retirement fund, taxable cash, or annuity.
- You have full control over how much to invest.
It’s your AVC, so you can increase, decrease, stop, or restart your AVC contributions at any time. This means as life events occur, your priorities may change; so too can your investment, ensuring financial security when you retire. - Provides you with the option of early retirement.
An AVC can help you to retire early providing you with additional income of up to 2/3s of your final salary as well as an initial lump sum of up to 1 and 1/2 times your final salary. - Tax free growth.
Investment returns earned by pension schemes are also exempt from capital gains, exit tax and dividend income tax and the lump sum you can take at retirement is tax-free up to certain limits.
How can you use your AVC?
Well, that depends on your circumstances.
At retirement your AVC can allow you to maximise the tax-free lump sum you receive
Your money can be put into an approved retirement fund, this gives you a more flexible lifestyle and enables you to withdraw your money as you require it.
The monies in the AVC can be used to buy a guaranteed pension for life – Annuity
What Does The Review Cover?
Financial Planning
The Kinetic Review is our trademark formula for forecasting your financial future – and identifying changes that need to be made now to improve your financial position.
Public Sector Pensions
We often meet with public sector employees who are not even sure which pension scheme they are in.
Often, employees could have breaks in service or received pension contribution refunds.
Visit our sister site MadeSimple.ie for expert information in Irish Public Sector Pensions
AVCs (Additional Voluntary Contributions)
(AVCs) are contributions that you can make in addition to your normal contributions to an occupational pension scheme in the public or private sector to increase your retirement benefits.
Savings and Investments
We offer a variety of different investment and saving options depending on the level of risk you are comfortable with.
Life Insurance
Nobody likes to think about the worst happening, but death is a fact of life.
It’s a good idea to have a plan in place to protect your loved ones financially in the event of your death.
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