Public Servants – AVC Tax Relief – How to calculate the scope for an AVC against the previous years income
A review must take place to determine the scope for the AVC which can be made in terms of obtaining Tax Relief. When determining the scope for that Additional Voluntary Contribution, a number of factors come under consideration. Please see Zurich tech talk guide here Public Servants PRSA AVC Tax Relief
Gross Earnings Gross Earnings for a prior year could be confirmed by reviewing the payslip for the last payroll period in the relevant year (See the cumulative table of earnings) or obtaining an Employment Detail Summary from the Revenue Website. There is also an overall upper limit on the amount of earnings that may be taken into account for the purposes of giving tax relief. The earnings cap is currently set at €115,000.
Age Related Limits
There is also an age-related percentage limit of an individual’s relevant earnings. The maximum amount of pension contributions which an individual may claim tax relief may not exceed the relevant age-related percentage of the individual’s earnings in any year of assessment.
The age related percentage applicable is based on the age attained in the year of the income which is being pensioned. So if you are pensioning the previous years income, you need to take into account the age attained in that year.
Existing Contributions.
The level of contributions already being paid by the scheme member in the given year must be taken into account. The standard contribution rate right across the public service is 6.5% of salary made up of 5% for the main pension scheme contribution and 1.5% in respect of a spouses and children’s scheme contribution. However it is important to understand that some members may pay more or less than this as there are differing agreements regarding contributions depending on when they commenced work and the sector in which they are employed. The actual level of contributions for a client should be confirmed by reviewing the last payslip for the relevant year which should have a cumulative table of same or by requesting from the employer or scheme administrator directly. It is important to note that the deduction formally known as the Pension Related Deduction (PRD) and now referred to as the Additional Superannuation Contribution (ASC) does not form part of the above age related limits and can be ignored when determining the scope for an AVC. Finally where there are contributions being paid towards the Purchase of Notional Service or pre-exiting AVC arrangements in 2019, these should also be taken into account when determining the scope for an AVC.
To Start your Zurich Low Cost Standard PRSA AVC with 100% allocation (0% contribution charge) please see https://www.labrokers.ie/prsas-ireland-personal-retirement-savings-account-pension-plan/zurich-low-cost-prsa-avcs/
To top up or add a one off lump sum to your existing Zurich Standard PRSA or PRSA AVC that was set up through LABrokers you will enjoy the same charging structure of 0% contribution charge for any top ups you make for the life of your policy please see https://www.labrokers.ie/top-up-your-existing-zurich-prsa-or-prsa-avc/
Information on Zurich https://www.zurich.ie/broker-centre/products/pensions-pre-retirement/standard-prsa-avcs-individual/