The Finance Act, 2013 permitted individuals who made contributions to an AVC to be allowed a once-off option to withdraw up to 30% of the current value of their AVCs. The option must be exercised within three years from 27th March 2013, the date of the passing of the Finance Act 2013, until 26th March 2016.
The option applies to:
- Additional Voluntary Contributions under an Occupational Pension Scheme
- PRSA Additional Voluntary Contributions
- Buy-out Bonds with an AVC element (for that AVC element only)
As the final deadline for applications is now approaching, applicants should note that an AVC Withdrawal form must be completed. Where the AVC policy is held under trust and the Trustees are the legal owners of the policy, the Trustee must sign the claim form. This will apply to AVCs paid into Occupational Pension schemes.
For Buy-out Bonds and PRSA AVCs the signature of the Policy Owner is required.
The withdrawal amount is taxable as Schedule E emoluments under PAYE but payments are not liable to PRSI or USC. Insurers are obliged to deduct tax at the higher rate of 40% unless they receive from Revenue a Tax Credit Certificate for the client for the year of payment. Applicants should contact Revenue directly in advance of making the withdrawal to arrange this Certificate and quote the relevant Insurers reference number. If not, Insurers will deduct the higher rate tax and you will have to subsequently request a refund of any overpaid tax from Revenue.
Where an AVC fund is subject to a Pension Adjustment Order (PAO), both parties to the order may exercise the option independently in respect of their respective “share” of the AVCs. In effect, it is deemed that there are two separate AVC funds, and the value is determined on the basis that the designated benefit under the PAO was payable at the time the AVC access option is exercised. Where benefits are subject to a PAO then applicants should contact their Trustee or Administrator for further instructions.