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Pension, Roscommon, planning, Kenneth HEgarty

Additional Voluntary Contributions (AVCs) are a way to make additional contributions towards your retirement benefits. 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.

Why would I need an AVC?

The maximum pension someone in the public sector can receive is 50% of their gross salary at retirement, this is based off 40 years of pensionable service and working until your contracted retirement age. With people joining the Public Sector later in life, by the time you may reach retirement age you may have only 20-25 years build up, or if you wish to retire early you may not have the required years built up to maximise your pension benefits.

Public Sector Pension Schemes

The majority of pension schemes in the public service are defined benefit schemes i.e. the pension benefits are specified or defined in the rules of the scheme. Thus the scheme member should know the calculation formula which will determine the level of benefits due at retirement.

Public service schemes pre-2013 are final salary defined benefit schemes i.e. the benefits formula is based on the level of pensionable pay at retirement.

This changed with the introduction of the Single Public Service Pension Scheme on 1st January 2013. The Single Public Service Pension Scheme is based on a career-averaging model, which means that your retirement benefits are based on a percentage of your pensionable earnings throughout your public service career as a member of the scheme.

Pension Modellers

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