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Section 1
AVC (Additional Voluntary Contribution) Scheme
Q. What is the eircom and eircom Trade Union Group Scheme?
A. This is an occupational pension scheme, designed to allow you to pay extra contributions to fund for additional Gratuity and/or Pension Benefits and avail of substantial Tax Relief. Your AVC fund will provide extra benefits for you on your retirement. eircom (when making deductions from pay), will apply your tax relief automatically.
Q. What are AVCs?
A. AVCs are a tax efficient method of making personal savings for your retirement. They may be used to supplement your pension benefits under the eircom Main Superannuation Scheme (called the “Main Scheme” hereafter) and the eircom Spouses’ and Childrens’ Contributory Pension Scheme.
Q. Why should I consider contributing to the AVC Scheme?
A. Because of the generous Tax Relief allowed, you may wish to:
• enhance your own Pension and/or Gratuity
• enhance your Spouse’s Pension
• build up a fund (called an Approved Retirement Fund) which you can keep invested in your own
name after retirement (subject to certain conditions)
Q. Does the AVC Scheme qualify for tax and PRSI relief?
A. Yes. Under current tax laws you will get tax and PRSI relief on both your AVC Scheme and any
contributions to the eircom Main Superannuation Scheme and the eircom Spouses’ and Childrens’ Superannuation Scheme - provided that the combined amount in any one year does not exceed 15% to 40% (depending on your age) of your taxable earnings in that year i.e. the total of your gross basic earnings, allowances, overtime etc. This tax relief will be applied automatically by eircom when making regular deductions from pay.
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Q. How do I enrol in the AVC Scheme?
A. There are three ways of enrolling.
(1) You can invest a once off Lump Sum contribution into the AVC Scheme (minimum €650) and avail of a generous Tax/PRSI Rebate (you apply for this from Revenue and Social Welfare).
(2) You can save direct from your pay and get automatic Tax and PRSI relief immediately (minimum amount is €20 per week or equivalent)
(3) You also have the option of doing 1 & 2 above, ie. investing a Lump Sum and having Regular Savings deducted from your pay.
Q. Can I make once-off lump sum contributions each year?
A. Yes. You can make once-off Lump Sum contributions at any time to increase your retirement benefits, subject to certain Revenue limits. (These limits are shown in the table above. The minimum once-off contribution is €650.)
Q. Will eircom contribute to this AVC Scheme?
A. eircom contributes towards the Main Scheme only. Any contributions towards the AVC Scheme are voluntary and will be made by you alone.
Q. How much may I contribute to the AVC Scheme?
A. AVC limits are now age-related for employees in Company Pension Schemes, as follows;
Age Personal Contribution Limit
(attained during tax year) (as % of schedule E earnings)
Up to 30 years of age 15%
30 up to 39 years of age 20%
40 up to 49 years of age 25%
50 up to 54 years of age 30%
55 up to 59 years of age 35%
60 years or over + 40%
See Note 2 for further details on these limits.
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Q. What can I do with my fund when I retire?
A. At retirement the value of your AVC fund will be available to increase your benefits in any one of several ways within the limits imposed by the Revenue. These include:
• Providing an extra tax free lump sum on retirement (up to a limit of 1.5 times final earnings, inclusive of your main scheme gratuity)
• Retain an investment fund in an Approved Retirement Fund (subject to certain conditions set out in the notes section-see Note 3).
• Increasing your personal pension (annuity or income for life).
• Providing or increasing a dependant’s pension payable in the event of your death.
Q. Where will my contributions be invested?
A. Irish Life Investment Managers are the largest Irish investment managers and have over ¤26 billion under management. They are the primary investment managers for the scheme and provide a comprehensive investment service for all members. This service is called the Individual Investment Service (IIS).
Individual Investment Service (IIS).
All members can avail of the Individual Investment Service (IIS). This is a life-styling option, which invests in the Consensus Fund for the growth phase of the AVC and then moves gradually over a 5-year period before retirement into the security of the Guaranteed Fund in order to consolidate all the prior years investment returns.The Guaranteed Fund is invested 1/3rd Cash, 1/3rd Fixed Interest and 1/3rd Equity and so has the potential to outperform a standard cash fund but also has an underlying guarantee of no fall in value.
The IIS is designed to transfer the member’s fund gradually over the 5 years before retirement, so as not to expose the member unduly to market conditions during this period. All contributions will be invested in this default strategy unless you indicate otherwise on your application form.
For those who want to select an alternative strategy, please see the section entitled ‘Alternative Investment Options’ in Note 4.
Q. What happens if I want to reduce or stop contributions?
A. Your contributions are flexible and can be reduced (subject to the minimum contribution) , increased or stopped at any time. However, you may not access your AVC fund until you take your main retirement benefits.
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Q. What are the services and charges relating to the Scheme?
A. Irish Life’s normal service includes the following:
Member Services
An ongoing member service plan, to include:
• Maintenance of scheme details and each member’s contribution and fund records.
• Fund values - available online on our PensionPlanet System. Also available on Pension Phone and/or on request. They are also included in the Benefit Statement.
• AVC Benefit Statement - issued annually to each member by post. These show fund values and all recent contributions invested and the relevant fund values.
• On-going management of members’ investment funds.
• Preparation of all documentation to comply with the Pensions Act 1990 (as amended).
• Preparation and making available of Annual Trustee Report.
As this is a substantial group scheme, there are no entry charges.
The on-going administration charges are as follows:
• An annual charge of 1% of the main funds (some non-indexed funds carry an extra charge).
• A ¤2 monthly policy fee, linked to the Consumer Price Index.
These charges will be deducted by Irish Life from contributions.
Q. Who will look after the AVC Scheme?
A. Irish Life Trustee Services Ltd. are the appointed Trustees to the scheme. It will be their job to make sure
that your interests are protected at all times.
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Q. What happens if I leave eircom?
A. If you leave eircom, your contributions cease. The main options available are to have the value of your AVC fund:
1. Transferred into a pension buy-out bond in your own name (also called a Personal Retirement Bond PRB).
2. Transferred to a new employer’s Revenue approved pension scheme.
3. Made paid-up (i.e. contributions to date remain invested but no new contributions can be added).
Q. What happens if I die before retirement?
A. The value of your AVC fund is payable to your estate.
Q. Who do I contact for more information?
A. An EIRCOM AVC Helpline exists to answer your queries on the AVC plan.
You can contact the Irish Life AVC Advice Centre on:
Telephone: 01 704 1845
E-mail: salessupport@irishlife.ie
Or for more information on the plan contact:
Michael Halligan
Halligan Insurance
Unity Building
16/17 Lower O’Connell Street
Dublin 1
Telephone: 01-873 1033
Fax: 01-873 1978
E-mail: info@halligan.ie
www.halligan.ie
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Note 1 For once-off Lump Sums invested before the end of October, you can receive tax relief in respect of the previous tax year so long as you have filed your tax returns before the end of October deadline and included the statement of receipt from Irish Life for this amount (for contributions within the age related limits).
Note 2 There are also benefit limits laid down by the Revenue Commissioners and this means that you may not be able to make contributions up to the limits specified above. If the amount of contribution you choose to make to the AVC Scheme is likely to breach these benefit limits you will need to choose a lower level of contribution. “Schedule E” earnings are your gross earnings from your eircom employment –the total of basic salary, overtime, bonuses, benefits in kind, etc.
Note 3 Subject to certain conditions, AVCs not taken as part of the tax free lump sum or pension may be invested in an Approved Retirement Fund (ARF). ARFs enable you to maintain your fund invested after you retire. You may withdraw part or all of your ARF as you wish during your retirement (subject to a requirement to withdraw at least 3% per annum from age 60). There is no tax payable on your ARF growth while it remains invested. All withdrawals from ARFs are subject to income tax at source. Availability of the ARF facility is subject to you having a guaranteed lifetime income of €12,700 p.a. This can come from the State pension or/and any pension you have from your main pension scheme. Otherwise up to €63,500 of your AVC fund must be paid into an Approved Minimum Retirement Fun (AMRF) and must remain there until age 75 (withdrawals before age 75 are allowed from the investment growth only).
Note 4 Extra Investment Information
For those who do not want to use the default IIS, there is a wide range of different investment funds available under the AVC Scheme. These offer varying degrees of risk and reward. You should choose a fund which matches your risk appetite and investment time horizon. The more equity and property and less fixed interest and cash in a fund the higher the expected return. However, this higher expected return comes at the price of higher risk.
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