Why save AVCs?
Ask yourself the following questions:
- What expenses will I have when I retire that I will need to cover from my retirement income?
- Will my occupational pension scheme and the State pension be my only source of income?
- Will this income be enough for the expected lifestyle I want in my retirement?
If you are currently a member of CWPS, you pay a contribution of €18.24 each week to your CWPS account and your employer pays €27.35 each week to your account. This combined amount of €45.59 is a considerably low contribution in comparison to what some workers pay to other occupational pension schemes, so you should consider the advantages of saving something extra to your Pension Account now.
Benefits of paying AVCs
If you save AVCs to your Pension Account, your account will increase and in turn provide extra benefits for you in retirement. For example you can:
- Increase your own pension in retirement.
- You can maximise the amount of tax-free cash lump sum you can take at retirement.
- After retirement you can choose to invest your AVC fund in an Approved Retirement Fund (ARF) subject to Revenue requirements.
- You will receive valuable tax relief on AVC amounts you pay, for example, every €100 you invest, it will currently only cost you €60, assuming you pay tax at 40%.
The table below gives an estimate of the accumulated fund that you could build up in your AVC account before your retirement at age 65. The example shows how an AVC saving of €100 a month can grow in value over a number of years. If you start saving €100 per month at the age shown in the left hand column, you could build an AVC fund of the amount shown in the right hand column. The sample table shown here assumes an annual investment return of 4.08%.
To see how another sum of money saved as an AVC will grow over time, please see our Pension Calculator on the sub menu.
To see how you can get tax relief on your savings and other useful information on saving AVCs please see our sub-menus on this page.