Last Minute AVC's

Last Minute AVC's

Last minute AVCs for public sector employees can be a very prudent and clever way of getting access to some extra cash on retirement. If you qualify for a last minute AVC, it makes complete financial sense to use this financial vehicle. From our experience in dealing with public servants and retirement planning for many years, most employees actually do have a Last minute AVC requirement but are unaware of their potential tax benefits and subsequently leave a significant chunk of money behind them at retirement.

Last minute AVCs are more of a tax planning transaction than an investment transaction. In short, you are just temporarily transferring funds into an AVC for a brief period of time, prior to retirement. Once you retire, you can then claim a tax refund on these contributions at your marginal rate of tax (20%/40%).

Last Minute AVC
Last Minute AVC

Last minute AVCs for public sector employees can be a very prudent and clever way of getting access to some extra cash on retirement. If you qualify for a last minute AVC, it makes complete financial sense to use this financial vehicle. From our experience in dealing with public servants and retirement planning for many years, most employees actually do have a Last minute AVC requirement but are unaware of their potential tax benefits and subsequently leave a significant chunk of money behind them at retirement.

Last minute AVCs are more of a tax planning transaction than an investment transaction. In short, you are just temporarily transferring funds into an AVC for a brief period of time, prior to retirement. Once you retire, you can then claim a tax refund on these contributions at your marginal rate of tax (20%/40%).

How do I know if I qualify for a Last Minute AVC?

There are 2 ways in which you will qualify for a last-minute AVC;

1. If you have less than 40 years at retirement

2. If you have gone past your retirement age and have over 40 years’ service completed.






1- Under 40 years service @ retirement

If you have less than 40 years of service at retirement, you will have a tax-free lump sum shortfall. This is basically the difference between the tax-free lump sum that you have earned with your years of service and the maximum Lump sum you would have earned if you worked full 40 years of service.

Your tax-free lump sum shortfall is the optimum amount of funds to be transferred into an AVC.

2- Over 40 years service @retirement

If you have worked over 40 years in the public sector and have not retired yet, You are allowed, under revenue rules to fund for 3/80th of your final salary for each year of service worked over 40 years. So, if you worked 43 years of service, for example, the optimum funds to be transferred into an AVC is 9/80ths (3 years x 3/80ths) x your final salary into an AVC.

Please note that there are certain conditions that need to be met before you qualify so please check your figures with a Qualified Financial Advisor prior to transferring your funds.

Already have an AVC?

If you already have an AVC, you could still require a last minute AVC to make up any shortfall that you have not made up yet. You will need to work out the optimum amount of money that can be withdrawn from your AVC tax free at retirement and then subtract this from your current AVC value. A last minute AVC can then be used to fund this shortfall.

Steps involved in using a last minute AVC

1. Work out your tax-free lump sum shortfall/the optimum funds to be transferred into an AVC

2. Fill in an AVC Application form and submit to AVC provider

3. Transfer your funds into the AVC providers bank Account

4. Retire from your job and draw down your pension

5. Draw your AVC funds tax free from the AVC provider

6. Complete a tax return and receive a tax refund at your marginal rate (20 or 40%) on your AVC contributions.

How do I know if I qualify for a Last Minute AVC?

There are 2 ways in which you will qualify for a last-minute AVC;

1. If you have less than 40 years at retirement

2. If you have gone past your retirement age and have over 40 years’ service completed.




1- Under 40 years service @ retirement

If you have less than 40 years of service at retirement, you will have a tax-free lump sum shortfall. This is basically the difference between the tax-free lump sum that you have earned with your years of service and the maximum Lump sum you would have earned if you worked full 40 years of service.

Your tax-free lump sum shortfall is the optimum amount of funds to be transferred into an AVC.

2- Over 40 years service @retirement

If you have worked over 40 years in the public sector and have not retired yet, You are allowed, under revenue rules to fund for 3/80th of your final salary for each year of service worked over 40 years. So, if you worked 43 years of service, for example, the optimum funds to be transferred into an AVC is 9/80ths (3 years x 3/80ths) x your final salary into an AVC.

Please note that there are certain conditions that need to be met before you qualify so please check your figures with a Qualified Financial Advisor prior to transferring your funds.

Already have an AVC?

If you already have an AVC, you could still require a last minute AVC to make up any shortfall that you have not made up yet. You will need to work out the optimum amount of money that can be withdrawn from your AVC tax free at retirement and then subtract this from your current AVC value. A last minute AVC can then be used to fund this shortfall.

Steps involved in using a last minute AVC

1. Work out your tax-free lump sum shortfall/the optimum funds to be transferred into an AVC

2. Fill in an AVC Application form and submit to AVC provider

3. Transfer your funds into the AVC providers bank Account

4. Retire from your job and draw down your pension

5. Draw your AVC funds tax free from the AVC provider

6. Complete a tax return and receive a tax refund at your marginal rate (20 or 40%) on your AVC contributions.

Work out your AVC calculation requirements now

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Work out your AVC calculation requirements now

© 2020 Money Maximiser | Money Maximising Advisors Limited is regulated by the Central Bank of Ireland - C154250 | Privacy Policy