Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

AVCs

Options
  • 25-10-2022 12:52pm
    #1
    deiselad17
    Registered Users Posts: 25 ✭


    Hi,


    I am just wondering can anyone shed some light on AVC contribution for me please and give a fool proof guide into them? Just a few questions, I am in the 40% tax bracket. If I pay for eg €20 per week into AVCs for 25 years, what is the total I would get from the AVC? Is it paid in a lumpsum or paid out weekly? I understand you have to take into consideration inflation and different prices that companies charge but just a rough estimate and also who is best to go to. Thanks

    Tagged:


Comments

  • Options
    #2
    Happyhouse22
    Registered Users Posts: 453 ✭✭Happyhouse22


    Short answer - we need a lot more info

    long answer -

    So if you put in 20 a week(which will cost you only 12 a week after tax) for 25 years you should have invested a total of 26,000.

    You will have a choice of where to invest that money - one option is a cash fundmeaning it will still be worth 26,000 (minus fees) .

    I would say this is a bad option as 26,000 in 25 years will be worth a lot less. Assuming you invest in well managed fund you should have more (with the risk of having less). If we assume a growth rate of 5% (quite a conservative estimate if you go for an international equity or similar option for your investment) then you should have about 47,000 on retirement.


    How this amount is payed out depends on a few factors...

    What type of pension do you have... your final salary etc.

    In general one can take up to 25% of a pension in a tax free lump sum (up to a max of 200k) - and then the remaining amount can be drawn down as regular income over your retirement (again different options here but feel this answer is already needlessly complicated for a simple question).

    For example your 47,000 could provide a lump sum of 11,750 plus an annual income of 1,762 to you (assuming money in ARF and 5% withdrawal rate).

    Oversll it would be very worth it considering the cost to you would be about 15,600 over the 25 years



  • Options
    #3
    Risoc
    Registered Users Posts: 158 ✭✭Risoc


    I see people say the tax-free lump sum can be "up to 200k". Is this 200k for everyone or calculated on your PRSI contributions or finishing salary?



  • Options
    #4
    Geuze
    Registered Users Posts: 13,086 ✭✭✭✭Geuze


    https://www.boards.ie/discussion/comment/120534374#Comment_120534374


    Tax-free lump-sum from your pension is nothing to do with PRSI or the SPC.

    All workers can receive up to 200k tax-free lump-sum.



Advertisement