Reduction in AVC Charges from January 2019

Cornmarket Brokers administer an AVC (Additional Voluntary Contribution) Scheme for INTO members which is endorsed by INTO. The charges in this scheme are being reduced and restructured from the start of 2019.

The most significant change will see the contribution charge – currently 2% of all regular contributions – removed. The once-off set-up fee for regular premium AVCs will increase from €525 to €595; this is deducted over the first 12 months’ contributions and attracts tax relief at the member’s marginal rate. A €100 fee will be charged for “no advice” AVCs set up after 1 January 2019.

For existing AVC payers, post-1999 members will see the contribution charge of 2% removed. Those who took out AVCs prior to 1999 are on different charging terms which include loyalty bonuses. Cornmarket advise that it is more likely that pre-1999 members will find their existing terms more advantageous although free to move to the new structure if they wish.

An example provided by Cornmarket looks at a person paying in €250 per month, increasing at 2% per annum, and with 4% growth each year. Under the revised structure, the savings in charges would be €337 at year 5, €760 at year 10, and €1,981 at year 20.

INTO is not a Financial Advisor but is conscious that many members seek to enhance pension and/or lump sum through the use of AVCs, and that there are taxation supports for this. That is why we supported the setting up of the Cornmarket scheme which we endorse. The Pensions Authority describes AVCs as “contributions that you can make in addition to your normal contributions to an occupational pension scheme to increase your retirement benefits. AVCs are a defined contribution pension arrangement provided for your scheme usually by an insurance company or specialist pension provider. The fund available at retirement is determined by the combination of your contributions and any investment returns on these contributions less charges. You can choose the rate at which to contribute to an AVC, subject to a maximum rate determined by Revenue and these AVCs attract tax relief, subject to Revenue limits.”