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Posts Tagged ‘Pensions’

Drawdown of AVCs

The Finance Act 2013 has introduced a facility whereby individuals can withdraw a portion of their AVC assets prior to retirement age. The key features are:
· It is possible to withdraw up to 30% of the accumulated value of Additional Voluntary Contribution (AVC) payments from a pension arrangement. This includes occupational pension plans, AVC plans, PRSA AVC plans and Personal Retirement Bonds with an AVC element.
· If an individual has more than one pension arrangement, the limit applies to 30% of the value of AVCs from each arrangement.
· Withdrawal is not an option on the value of employer contributions or employee regular contributions.
· Only one withdrawal is allowed.
· The withdrawal can take place at any time between 27th March 2013 and 26th March 2016.
· The withdrawal is liable to income tax but not subject to PRSI or USC deduction. The income tax liability is based on the individuals overall income in the year of withdrawal.
The Registered Administrator (RA) for the pension plan will have procedures for AVC drawdown. The RA will require the completion of a form. The RA is obliged to deduct income tax at source. Most RAs are likely to automatically deduct at the 41% income tax rate with the provision of the individual to either prove a lower tax rate liability prior to payment or the individual can claim back any excess deduction of tax from the Revenue Commissioners. Each RA will have procedures for the sale of investment units and the timelines for the settlement of payment. The RA might only make payment by electronic fund transfer.
If a Pension Adjustment Order (PAO) is in place, each party can access the value of AVCs based on the terms of the PAO.
Interested in finding out more…
Depending on an individual’s personal financial circumstances, the option to withdraw up to 30% of the value of AVCs could be good or poor financial advice. This is a technical note and should not be regarded as financial advice.

Feel free to contact us for more information or if you have any specific questions to relation to AVC drawdowns
Thanks to our friends in Acumen & Trust for this technical update.

CAPPING PUBLIC SERVICE PENSIONS

A cap on retirement income would be preferable to any further reductions in tax relief on pension contributions, according to the Minister for Social Protection, Joan Burton. But the days of people in their 50s retiring on pensions of €150,000 are numbered because Ireland can no longer afford such largesse.

PENSIONS

More than 50% of companies surveyed would wind up their pension schemes and 25% would slash benefits and increase employees’ contributions if regulators imposed stricter funding obligations, according to The Sunday Times.

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