In association with
NUI GALWAY
ADDITIONAL VOLUNTARY CONTRIBUTION
SCHEME BOOKLET.
Presented by:
Noel Hackett, QFA
Pensions Specialist
New Ireland Assurance
Galway.
INTRODUCTION.
As a member of the National University of Ireland, Galway (NUI Galway) Pension
Scheme, you have taken the first steps to provide for your financial future.
When you retire, you will expect to maintain the same standard of living, yet you will
have more time to spend with your family, to go on exotic holidays and so on.
Research* shows that we are now living much longer, men to age 75 and women to
age 80, which means we will need more income in retirement. (*CSO Statistical yearbook of
Ireland 2004).
Just ask yourself, will the pension from my employer’s pension scheme be
enough to retire on?
The generous benefits provided by NUI Galway may fall short of the ideal income
level that you may require. There are a number of reasons why this might be so:
1. Reduced benefits will normally be payable by the Scheme if you take early
retirement.
2. You may have joined the Scheme relatively late in your working life, and
thus may not qualify for the maximum benefits under the Scheme. 40
years service is required to secure the maximum benefits under your
Scheme.
3. The NUI Galway Pension Scheme may provide a lower pension benefit
than the maximum allowed by Revenue Commissioners. This is the case if
you joined the Scheme after 6th April 1995.
You may simply wish to avail of the:
¾ maximum benefits which are approved by the Revenue
Commissioners,
¾ generous tax reliefs on your contributions, and
¾ new and enhanced retirement options that are open to you and your
AVC fund at retirement.
It is important to consider making AVCs to top up your pension to help provide
for a comfortable retirement.
You can take advantage of the generous tax reliefs available on your
contributions, and also bearing in mind that all growth in your AVC fund is
currently exempt from DIRT and other taxes.
TAX ADVANTAGES:
You will normally receive full tax relief at your marginal rate on all pension
contributions that you make.
The limits on the percentage of your earnings on which you can claim this relief
depends on your age, as set out in the table below:
Up to age 30
30 to 39
40-49
50- 54
55 – 60
Age 60 +
15% of gross salary
20% of gross salary
25% of gross salary
30% of gross salary
35% of gross salary
40% of gross salary
These maximum limits include contributions to the NUI Galway Pension Scheme plus
any other AVCs that you may make.
Your gross salary for pension tax relief purposes is restricted to €254,000 in 2006. This figure may be subject to
revision by the Minister for Finance every year. It is important to note that tax relief is not automatically
guaranteed and, in certain circumstances, your contributions may hve to be restricted in order to comply with
Revenue limits - you will be advised if this affects you.
Legislation currently restricts the maximum pension fund you may have on retirement. It also restricts the amount
of ax-free cash you may take. These limits apply to the aggregate of all of your pension plans. These limits (which
can change each year) are €5 million and €1.25 million respectively for 2006. The excess amounts will be subject
to tax, if your benefits at retirement exceed the limits.
In addition to the tax relief on contributions, the following valuable tax
incentives are available:
1.
2.
3.
PRSI relief will be granted automatically, if you are eligible for it - as your
AVC contributions are deducted by NUI Galway Payroll at source every
month. You will not have to complete or submit forms to the Tax Office to
avail of this relief.
The AVC Pension fund in which you invest is completely free from
Income tax, DIRT tax and Capital Gains Tax.
Part, or in some cases all, of your AVC fund may be taken as a Tax Free
Lump Sum on retirement.
The Government has also introduced a pension incentive for SSIA (Special Savings
Incentive Accounts) holders whereby you could invest part of your SSIA fund into an
AVC and avail of a further bonus and avoid exit tax on that portion of your SSIA
account. It is advised to consult a professional financial advisor to ascertain if this
Scheme would be suitable for you.
This Additional Voluntary Contribution Scheme is separate to the NUIG Pension
Scheme ‘Purchase of Notional Years of Service’ facility. For further information on
this facility please contact NUIG. You should carefully consider which one is most
suited to your needs.
MAXIMUM FLEXIBITY AT RETIREMENT THROUGH AVCs.
By investing in Additional Voluntary Contributions, there is the widest possible
choice of benefits at retirement - so you can pick the benefits that suits you best.
If your NUI Galway Pension Scheme benefits fall below the maximum allowed
by the Revenue, you may be able to use your AVC contributions to:
1.
2.
3.
4.
4.
Boost your tax-free lump sum at retirement.
If you joined the NUIG Scheme before 5th April 1995, take a tax-free
lump sum at retirement, without reducing your pension.
Increase your pension income in retirement
Increase the pension payable to your spouse or dependants upon your
death in retirement.
Increase the lump sum benefit payable if you should die in service.
You can also, again subject to Revenue limits and conditions:
A
Arrange for the pension bought by your AVCs to increase in payment,
to offset the impact of inflation.
B
Invest your Fund in an Approved Retirement Fund.
C
Take your AVC fund as an immediate taxable lump sum.
Approved Retirement Fund (ARF)
Due to changes in the Finance Act 2000, you can now choose to invest your AVC
fund at retirement in an Approved Retirement Fund (ARF).
ARFs have a broad range of investment options, and a regular income facility can be
availed of. It is also worth noting that you will have full control and access to your
ARF money post retirement.
More importantly your ARF fund can be passed on to your Spouse or on to your
estate as part of your inheritance tax planning.
Please note certain conditions and taxes apply to ARFs. Further information is
available on request and will be provided to you when you are retiring.
WHAT SHOULD I DO NEXT
To find out more about the NUI Galway Group AVC Scheme and help fulfil your
retirement dreams, simply contact the following:
Mr Jack Hutchinson NUI Galway Pensions & Investment Office
Tel:091-524411 EXT: 2145
Email: Jack.Hutchinson@nuigalway.ie
Ms Breda Kenna NUI Galway Pensions Office
Tel; 091-512478
Email: Breda.kenna@nuigalway.ie
OR:
Noel Hackett, (QFA, MIB, Dip Investment Planning)
Qualified Financial Advisor
Pensions Consultant
New Ireland Assurance
22 Eyre Square
Galway
Tel : 091-563023
Mobile: 086-8186163
Email: Noel.hackett@newireland.ie
Ring, Text or Email Noel Hackett to arrange an Appointment to open your AVC
account, or for further information.
This brochure is based on our understanding of current legislation and Revenue practice as
at October 2006. While great care has been taken in its preparation, this brochure is of a
general nature and should not be relied on in relation to a specific issue without taking
financial, insurance or other professional advice.***
If any conflict arises between this brochure and the Policy Conditions, the Policy Conditions
will apply.
Important Note:
It is important to note that the value of the pension investment fund will depend on a number
of factors including investment returns, which are not guaranteed. Past performance is not
necessarily a reliable guide to future investment returns, which may be higher or lower than
assumed. The value of your investment and the sum you originally invested are not
guaranteed. All company pension plans are required to be approved by the Revenue
Commissioners and registered with the Pensions Board.
Noel Hackett is a tied agent of New Ireland Assurance Company plc for life and pensions business.
New Ireland Assurance Company plc is regulated by the Financial Regulator. A member of Bank of
Ireland Group. Bank of Ireland Asset Management Ltd is authorised by the Financial Regulator under
the Investment Intermediaries Act, 1995.
*** The material in this document is for information purposes only and does not constitute an offer or
recommendation to buy or sell any investment or subscribe to any investment management or advisory
service.
Warning: the value of your investment may go down as well as up.