Many people ask this question, especially those approaching retirement, have a shortage in service OR indeed a surplus in service (and are over Normal Retirement Date). In these cases, the answer is YES: a Last Minute AVC is suitable.
Opting for a Last Minute AVC offers benefits such as a tax refund at your highest tax rate and zero risk to your funds. The entire process typically takes about 3 months to complete. If you’re intrigued to learn more, read on.
Consider someone earning €40,000 annually, a pre-‘95 civil servant with less than 40 years of service, and planning to retire soon, they should consider a Last-Minute AVC. If you have a service shortfall of 5 years, you could potentially qualify for €7,500, resulting in a tax refund of €3,000 from Revenue.
The primary purpose of choosing a Last Minute AVC is to claim a tax refund from Revenue for taxes already paid in the year of retirement (including the prior year). Given that your service won’t be complete on your retirement date, you won’t receive a full tax-free lump sum from your Employers Superannuation Scheme. To bridge this gap, Revenue permits the use of the last minute AVC.
This option is also suitable if you have a surplus in service, ie. over 40 years and have passed your Normal Retirement Date.
The most important action is to put the AVC in place before your actual date of retirement. Remember, administration takes some time so you must do this whilst still in employment.
Anyone looking to know more, should contact our Pensions Dept on AVC@LFS.ie (PH. 01 8015808)