AVC Discontinuance

Mongfinder General

What would happen in the event that I pay AVCs for 10 years but want to redeem before retirement. I would be paying around 8000 pa gross (4800) net pa. Would I get hit with early redemption penalties/lose tax relief? Is it even possible to access the proceeds before retirement?

Henry Ford III

Not easily answered. Much depends on your individual circumstances.

However AVC's are part of your pension and can't be encashed at will like taking money out of a cash point.

Mongfinder General

https://www.boards.ie/discussion/comment/119865512#Comment_119865512

Thanks Henry - yes, there is very little information available on this contingency online. I think reducing to the lowest possible monthly contribution is the easiest solution. I think it’s currently €75.

AndrewJRenko

Depends on your age and whether your are still in the employment that the AVCs relate to.

If you’re over 50 and no longer working for that employer, there’s a good chance that you can access the funds.

coylemj

https://www.boards.ie/discussion/comment/119865708#Comment_119865708

What will your AVC supplier do if you reduce the payments to zero i.e. take a break from making contributions?

Mongfinder General

https://www.boards.ie/discussion/comment/119869249#Comment_119869249

I don’t know - I’m thinking leave the avcs on the pot until retirement age?

coylemj

https://www.boards.ie/discussion/comment/119869612#Comment_119869612

Sounds good, though as you can't cash it in, you don't really have much choice. Other than to move the money to a different exempt fund. What I was getting at is that surely the AVC provider cannot force you to make contributions forever? I can see why they would impose a minimum contribution when you sign up - they don't want the admininstrative overhead of taking on someone who is only going to contribute €10 per month. But there isn't much they can do if you decide to take a break and stop making contributions.

Henry Ford III

https://www.boards.ie/discussion/comment/119874057#Comment_119874057

Depends on the t's and C's of the contract.

coylemj

https://www.boards.ie/discussion/comment/119882578#Comment_119882578

Even if there's a minimum contribution stated in the Ts & Cs, what can the AVC provider do if the OP stops making payments?

youngblood

https://www.boards.ie/discussion/2058271445/avc-discontinuance

You can make a once off withdrawal from you AVC's- but only a percentage of your total-your provider will have more detailed information.

I withdrew money and had it in my account in a very short time

coylemj

https://www.boards.ie/discussion/comment/119885313#Comment_119885313

I think that was a temporary measure - it was announced by Michael Noonan in the budget in late 2012, was included in the Finance Act 2013 (S.17) and applied only from March 2013 to March 2016. You were allowed to withdraw up to 30% of your AVC fund. On which you had to pay your marginal (top) rate of PAYE.

https://www.revenue.ie/en/tax-professionals/tdm/pensions/chapter-30.pdf

Henry Ford III

https://www.boards.ie/discussion/comment/119885300#Comment_119885300

From experience there's unlikely to be any penalty for taking a premium holiday beyond the first 5 or 6 years of the contract. Before that a penalty can apply.

The J Stands for Jay

https://www.boards.ie/discussion/comment/119885313#Comment_119885313

Wasn't that a one off temporary budget measure that ended a decade ago?

youngblood

Yea was around 2016, wasn't aware it was a temporary measure!