University College Dublin Additional Voluntary ... (9-8) UCD AVC wr.pdf · Stillorgan, Co Dublin....

University College Dublin Additional Voluntary Contribution Scheme

Explanatory Booklet

For members of the UCD Pension Scheme

3105cb (9-8) UCD AVC:3105cb (1-8) UCD Avc BK 30/09/2008 11:31 Page 1

Contents Page

Introduction 2

The Additional Voluntary Contribution Scheme 3

• What are AVCs 3

• Why make AVCs 3-5

• Contributions and Tax relief 6-7

• AVC�options at Retirement 8

• Approved Retirement Funds 9-10

• Investment Explained 11-15

• Charges under the AVC�Scheme 16

• General Provisions of the AVC�Scheme 17

Appendix 1 Notional Service and�AVCs 18

• How the Schemes differ

Appendix 2 Revenue Maximum Limits 19

Appendix 3 Complaints Procedure 20

1

UCD AVC Scheme - Policy Number 601104


Introduction

The UCD Pension Scheme of which you are a member is operated on a defined benefitbasis, which means that your retirement benefits, made up of pension and tax free lump sum(gratuity), are based on your years of service and your pensionable salary as defined underthe scheme rules. Pension is calculated as 1/80th for each year of service maximum40/80ths and tax free lump sum is calculated as 3/80ths for each year of service maximum120/80ths.

The Additional Voluntary Contribution (AVC) Scheme is designed to allow you makeadditional contributions in a tax efficient manner to provide additional benefits for you andyour dependants upon retirement.

The UCD AVC Scheme is open to all employees who are included in the UCD PensionScheme and wish to make regular and/or once off single AVCs.

This booklet is intended as a guide to how the AVC Scheme works.

You should familiarise yourself with its contents.

The formal documents under this Scheme are the Declaration of Trust and Rules and thePolicy Document. If any conflict arises between the formal documents and this booklet, thenthe terms of the formal documents will apply.

The Scheme is set up under trust with appointed Trustees and the assets of the Scheme aresolely for the benefit of the members. It is the Trustees duty to ensure that your interests asscheme members are protected at all times.

Consultants and Administrators: PenPro Limited, 14 Priory Hall, Stillorgan, Co Dublin.Tel: 01 2000100 Fax: 01 2000101Email: [email protected]

Trustees: Irish Pensions Trust LimitedTrustees of the UCD AVC Plan Oyster PointTemple Road Blackrock Co. Dublin Tel: ( 01- 2799620)

Investment Managers: Irish Life Investment Managers

The Plan is registered with the Pensions Board, registration number 79415

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What are Additional Voluntary Contribution (AVCs)?

AVCs are personal contributions that allow you to provide for additional benefits over andabove those provided under your pension scheme. Because full Income Tax and PRSI reliefis generally available they are a very tax efficient way of enhancing your retirement benefits.

(Important Note: Members who will be short of service to achieve maximum retirementbenefits have the option of making contributions to this AVC scheme and/or purchasingadditional years under the Notional Service Purchase Scheme.Whereas brief commentary ismade in Appendix 1, full detail relating to the latter can be obtained by contacting yourPension & Benefits Section in UCD.If you are a short service member you are stronglyrecommended to get detail for both schemes so that you can make a fully informeddecision.)

Your AVCs are invested to generate a fund and upon retirement the accumulated fund canbe used in a variety of ways to provide benefits. The AVC scheme does not provide definedbenefits.It is a defined contribution scheme This means that AVCs do not specifically buyadditional years of service as under the Notional Service Purchase Scheme.Rather yourcontributions are invested and with investment growth, which can rise and fall dependingon where you have invested your contributions, will provide a fund to provide benefits atretirement.The benefits provided will depend on the level of contribution made, the term toretirement and the investment growth achieved. The AVC scheme is a separatearrangement from the main UCD Pension Scheme.

Why make Additional Voluntary Contributions?

Supplement your income

In addition to building up an AVC fund, some of which may be taken as Tax Free Cash, manymembers see making AVCs as a very tax efficient way of building up a fund to bridge the gapwhich can be sizeable between pre and post retirement income.

3

Examples

Joined Pre’95 Joined Post’95Full (40yrs) Short(35yrs) Full(40 yrs) Short(35 yrs)

Service Service Service Service

Pre Retirement Gross Annual Earnings: ¤60,000 ¤60,000 ¤60,000 ¤60,000

Post Retirement UCD Pension: ¤30,000 ¤26,250 ¤18,389 ¤16,090

Contributory State Retirement Pension: ¤nil ¤nil ¤11,611* ¤11,611*

Total Post Retirement Pension: ¤30,000 ¤26,250 ¤30,000 ¤27,701

% Reduction in Pre Retirement Earnings: 50% 56% 50% 54%

(*2008 State Retirement Pension)


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Increase your Tax Free Gratuity

If you have less than 40 years service or have earnings from UCD that are not pensionableunder the UCD pension scheme then there may be a great opportunity for you to increaseyour tax free gratuity payment .

Provide additional income to your spouse/dependants

If you are a member of the Spouse’s and Children’s scheme under the main UCD pensionscheme on death in retirement a pension equal to 50% of your pension is payable. Thistranslates as a maximum of 25% of your pensionable earnings.

By making AVCs you give yourself the opportunity to provide additional income for yourspouse.

Under the AVC Scheme you may, with your AVC Fund, opt to purchase a Spouses Death inRetirement Pension at the date of your retirement. This Spouses Pension becomes payableon your death in retirement.

Alternatively, you may transfer your AVC Fund to an Approved Retirement Fund (ARF) atretirement and doing so provides you with the opportunity to provide additional income toyour spouse or dependants as on your death your ARF Fund may be transferred to an ARF inyour spouse’s name. There is no income tax or capital acquisitions tax due on transfer. (Seepage 8 for full detail on ARF)

If you have less than 40 years pensionable service by Normal Retirement Age there is anoption for you to purchase added years instead of or in addition to AVCs. Your AVC fund

Short Full (40 yrs)Service but you (35 yrs) have other Non Pensionable service taxed UCD Income

Pensionable Earnings: ¤60,000 ¤60,000

Non pensionable taxed UCD earnings: ¤nil ¤10,000

Revenue Maximum tax free gratuity allowed: ¤90,000 ¤105,000

Gratuity from UCD pension Scheme: ¤78,750 ¤90,000

Difference can be paid from AVC: ¤11,250 ¤15,000

Examples

Pensionable Earnings ¤60,000

Your Pension(40 yrs service) ¤30,000

Your Spouses Pension ¤15,000

Your pension(35 years service) ¤26,250

Your spouses pension ¤13,125


may also be transferred to the UCD Pension Scheme at the date of retirement to purchaseadded years .

Please refer to the Pension & Benefits Section in UCD and they will provide details of thisoption, if you are eligible, of purchasing ‘Added Years ‘under the Notional Service PurchaseScheme.

5


Contributions and Tax Relief

Do my Additional Voluntary Contributions qualify for Tax and PRSI relief?

Yes. Under current tax laws you will get Tax and PRSI relief, subject to certain overall limitson your Additional Voluntary Contributions.

If you joined service prior to April 1995 and you made an AVC of ¤100 a month and if you areon the 41% rate of tax, you would get tax relief @41% and PRSI relief at 2.95% (totalling43.95%): a ¤43.95 saving.

So the ¤100 investment only costs you ¤56.05 from your after tax pay.

* These tax and PRSI rates are effective in 2008. The PRSI relief for salaries in excess of ¤50,700 is at 2% for both categories (Health Levy)

** Employees who joined service prior to April 1995 pay a lower PRSI rate.

Are there restrictions on AVCs?

The Revenue will allow full tax and PRSI relief on your AVCs paid into the AVC Plan each yearup to certain limits based on your age as follows:

*Remuneration includes all taxable income ( up to a maximum of ¤275,239 - 2008 level).

6

Age Band % of Remuneration

Under 30 years of age 15%

30 to 39 years of age 20%




60 years of age and over 40%

Examples

Joined Pre April ’95 Joined Post April ’9541% 20% 41% 20%

tax rate tax rate tax rate tax rate

Monthly Contribution ¤100.00 ¤100.00 ¤100.00 ¤100.00

Less Tax Relief* ¤41.00 ¤20.00 ¤41.00 ¤20.00

Less PRSI relief** ¤2.95 ¤2.95 ¤ 6.00 ¤6.00

Net Cost to you ¤56.05 ¤77.05 ¤53.00 ¤74.00


7

The limits above include your normal contribution to the UCD pension scheme and anycontributions you may be making to purchase added years under the Notional ServicePurchase Scheme. There are also limits on the maximum benefits you may take.

How do I claim tax relief?

Your regular AVCs will be deducted via payroll and in this way Tax and PRSI relief will begranted at source. You do not have to make a claim. Your AVCs are forwarded each monthdirect to Irish Life for investment.

In addition to regular contributions you also have the facility of making once off singlecontributions to the AVC Scheme at any time. You will receive a Tax certificate from Irish Lifeconfirming payment which you send to your Inspector of taxes to claim your tax rebate.Once you have received your tax rebate you can then claim your PRSI rebate by writing to:

Customer Service Section, Office of the Collector General, Sarsfield House, Limerick.

Depending on the size of your single contribution you may be able to get your tax reliefthrough pay-roll. You can discuss this with PenPro on 01 2000100.

If you have not paid the maximum contributions allowed in any tax year you have until thefollowing 31st October to make a payment and claim tax and PRSI relief e.g. 2007 tax yearfor this purpose ends on 31st October 2008.

(Important Note: To claim tax rebate in respect of prior year it is vital that you send your tax certificateto your inspector of taxes and express your wish to have your contribution backdated to the prior yearfor tax rebate purposes before the deadline date, 31st October each year. Your tax returns should befully up to date. For members making their tax return online there is normally an extension of a coupleof weeks.The date is advised each year.

Can I change my contribution level?

Yes. You have the flexibility to increase contributions subject to revenue funding limits .Contributions may also be decreased, or interrupted indefinitely. Please note that the valueof any AVCs paid into the scheme cannot be paid out until retirement once you havecompleted 2 years service under the main UCD Pension scheme.

How will I be advised of my contributions and fund value?

Each year you will receive a personal benefit statement from Irish Life which sets out yourtotal contributions to date and those received in the previous 12 month period. The benefitstatement also sets out detail of your chosen investment fund(s),charges, current values anda projection of your fund value at retirement.

You will also be given your own PIN number allowing you access to the Irish Life Pension Planetwebsite where you can get details of your personal AVC account on www.pensionplanet.ie


At retirement, the fund accumulated under your AVC scheme can be used as indicatedabove to provide one or more of the following benefits, subject to Revenue limits:

• Tax free lump sum payment at retirement*• Approved Retirement Fund (ARF) or Approved Minimum Retirement Fund (AMRF)• Additional Member’s pension• Additional Spouse’s pension (on member’s death after retirement)

At retirement to be able to take any part of your AVC fund as a tax free lump sum you need to have lessthan 40 years pensionable service and/or have other UCD taxable earnings that are not pensioned underthe UCD pension scheme. If neither of the above apply to you then none of the AVC Fund may be takenas Tax Free Lump Sum. See page 4 for examples.

Additional Member’s pension

Generally upon retirement you may choose to purchase additional pension (payable for life),the cost of which depends on your age, gender and interest rates at date of retirement. Youmay also have the option to buy additional pension by purchasing added years through theNotional Service Purchase Scheme with your AVC (contact the Pension & Benefits section inUCD for further detail).

Many members may prefer the option to transfer their AVC Fund to an Approved RetirementFund (ARF) as the ARF allows you greater flexibility and control over your money throughoutyour retirement.

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Tax FreeLump SumARF

AdditionalPension

AVC Fund used atretirement to provide

and/or and/or

What are my AVC options at retirement ?


Approved Retirement Fund (ARF) or Approved Minimum Retirement Fund (AMRF)

An Approved Retirement Fund (ARF) is a personal pension investment fund that you canmanage and control after your retirement.

Rather than using your fund to purchase a pension, which will die with you unless you optfor a spouses pension, you may choose at retirement to invest your AVC fund in an ARF.Growth within the ARF is tax free.

Investing in an ARF allows you to control the build up in your ARF and you may draw downincome and capital as you choose or leave it as security for your family on your death. In orderto qualify for an ARF you must have a minimum guaranteed lifetime income of at least ¤12,700per annum, including the State Pension. Drawdown of capital or income from the ARF aresubject to income tax at your marginal rate of tax at the time (and Health Levy if applicable).

With effect from 2007, for any retired member aged 60 or over, there is a minimum deemeddistribution from your ARF at 31st December each year. At 31st December 2007 it was 1% ofthe ARF value, at 31st December 2008 it will be 2% of the ARF value and from 31stDecember 2009 onwards it will be 3% of ARF value. Any actual drawdown from your ARFtaken earlier in the year will be deducted from the deemed distribution.

On death any balance remaining in the ARF will pass to your spouse or estate

Approved Minimum Retirement Fund (AMRF)

If you do not have a lifetime guaranteed income of ¤12,700 per annum, (including the State Pension) at your retirement you may invest in an AMRF. Draw down of capital from anAMRF is not permitted prior to age 75. You may, however, withdraw growth arising within the AMRF regardless of your income. This will also be subject to income tax at yourmarginal rate and Health Levy if applicable.

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Approved Retirement Fund (ARF)

The tax treatment of your ARF on death depends on your relationship to the beneficiary:

Beneficiary Income Tax Capital Acquisitions Tax

Spouse No tax is due on the transfer to No an ARF in the Spouses name

Subsequent income drawn taxed atmarginal rate of tax

Children under 21 NIL Yes (normal limits apply)

Children 21 and over 20% / No Health Levy No

Others 41% Yes on balance after payment ofincome tax (normal limits apply)

*41% and Health Levy deducted by Qualifying fund Manager but possible tax rebate if beneficiary is on lower tax rate.


Pensions & Approved Retirement Funds at a glance

PenPro Ltd will meet with you before you retire to fully advise you of all your options.

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Pensions Approved Retirement Funds

You will receive an income for life You continue to own and control your fundafter retirement

The rate of annual pension depends on You may opt for a regular income or draw annuity rates which are linked to interest rates, down income as and when you need itgender, average life expectancy and age at retirement

Unless you opt for spouses pension your Unlike a pension, any balance remaining inpension will die with you unless you have the fund after your death will pass to your purchased a pension with a minimum payment estate. Any tax due will depend on your period eg five years, where pension is paid for relationship to your beneficiaries5 years whether or not you live that long.


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Investment Explained

It is important that you take the time to understand the investment options available to you.Choosing the right fund(s) can ensure that your savings work hard for you. You don’t have tobe an investment guru to make an informed choice in relation to the fund(s) into which youinvest your AVC contributions. The information on the next few pages will help youunderstand what is involved. You also have the option of meeting with your PenProconsultant for full discussion on this important matter.

How are my AVCs invested?)

Your AVCs can be invested in a range of different assets, which are set out below.

Equities

Also known as company shares. Equities are the asset class with the highest potentialreturns, but are also the riskiest. Returns over the longer term have been higher than otherassets, but there has also been periods of negative returns.

Gilts or Bonds

These are loans to governments or large companies. They are usually for a specified lengthof time and have a specified interest rate. The amount of risk attached to the income streamis therefore quite low.

Property

Investment can be in offices and commercial property. The risks and return can varydepending on the rent gained and the appreciation or depreciation of the underlying asset.

Cash

Investment in cash on deposit is very low risk but the return is also low due to the high levelof certainty involved and low interest rates. The potential downside here is that returnscould be so low that the value of your money is eroded by inflation over time.

Who invests my AVCs?

Irish Life Investment Managers, one of the top performing investment managers in Irelandwere selected to look after the investment of your AVC contributions. Your employer andthe Trustees keep the performance of the investment manager under review both in real andcomparative terms with other managers in the market.


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What is the role of the Investment Manager?

The job of the Investment Manager is to bundle together different combinations of assets soas to offer different levels of potential risk and return to you as an investor. The overall fundis divided into units. The price of the units reflects the value of the assets in the fund, this isknown as a unit-linked fund. As a result you don’t have to choose specific shares to invest in.Investing in a range of assets helps spread the risk so that your fund is not over-exposed tofluctuations in individual shares – this is called diversification.

Allowing members to pool their contributions into one fund provides certain advantages.This means that you get better value. For example, the fund will pay lower charges forpurchasing shares than if each individual member had to purchase shares in their own name.

The objective of the investment manager is to maximise long term returns while minimisingrisk. There are two different approaches to achieving this objective – indexed fundmanagement and active fund management.

Indexed Fund management - (Equity Element)

To avoid the risk of an investment manager whose funds perform below the rest of themarket, investments can be made in indexed managed funds also called passively managedfunds. With indexed funds the investment manager does not choose which shares to investin. Instead the investment manager replicates the returns of a particular benchmark index,e.g. (FTSE 100), by investing in shares in the same proportion as they are contained withinthe index. This means that the performance of the fund will always be very similar to theperformance of the rest of the market and will be close to the average performance of otherinvestment managers.

Active Fund Management - (Equity Element)

Within an active managed fund, the investment manager undertakes research and makesdecisions on what stocks or shares the funds should invest in based on their own view ofeconomic conditions. The aim of the investment manager is to outperform the averagemanager.

Actively managed funds will contain market risk and investment manager risk. There ismarket risk because it is invested in shares and manager risk because the investmentmanager makes all the investment decisions. Therefore the level of risk associated withactively managed funds is generally higher than indexed managed funds. This also meansthat the level of expected returns or losses can be greater.


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What Investment options are available?

There is a broad range of funds available that can be split into the following risk categories:

A brief commentary on some of the more popular fund choices are set out overleaf.

Advice on all fund options is available from Penpro (01 2000100)

Risk Type Fund Typical Investor profile

Low Risk: *Secured Performance Fund Member is close (within 7 years) toretirement.

Capital Protection Fund Member is a cautious investor and does not want to see any risk of a fall in fund values.

Cash FundPension Protection FundFixed Interest Fund

*member must have more than 10 years to retirement to invest in this fund.

Medium Risk Consensus Fund Medium time (more than 7 years) togo to retirement

Medium Risk Active Fund Takes a long term view and is willing (High end ) to risk some falls in value for greater

ultimate fund return.Property Fund Has some investment experienceGlobal Access Fund

High Risk Equity Fund Long time (more than 12 years) to to go to retirement.

Indexed Global Equity Fund Takes a long term view and is willingto accept higher risk in return for possible greater ultimate fund return.

Global Access Equity Fund Is an experienced investor or hasother investments.

Fidelity International FundIndexed Markets Managed Fund(Irish, UK, European,NorthAmerican, Japanese, Pacific)

In addition there is a ‘default investment option ‘ which initially invests in the Consensus Fund andmoves to the Capital Protection Fund in the 5 years ( 20% each year) approaching NormalRetirement Age. (See Individual Investment Service as set out on page 15 )


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Consensus Fund

The objective of this fund is to provide a return in line with the average fund performance ofall Irish pension fund managers. Irish Life achieve this by matching the average investmentmix of Irish fund managers, and by tracking the performance of stock market indices (such asthe ISEQ index). Because investment manager risk is reduced, this fund is viewed as aMedium Risk Fund. However, generally 70/80% of the fund is invested in company sharesand therefore the value of the fund can rise or fall.

Key Features:

• Aims to achieve a return in line with the average fund performance of all Irish pensionfund managers.

• By matching the average investment mix of Irish fund managers it eliminates the risksassociated with relying on the judgement of just one investment manager.

The Secured�Performance Fund

This fund is invested in the same manner as the Consensus Fund above, however returns aregiven in a smoothed fashion. At the start of each year a rate of return is announced for thecoming year. Once declared the return cannot be withdrawn. The declared return can neverbe negative.

If you leave this fund due to an investment decision (i.e. switch to another fund) then thevalue of your fund may be reduced depending on economic conditions. No once off singlecontributions are allowed into this fund. To be eligible to invest in this fund you must havemore than 10 years left to retirement. This is a Low Risk Fund.

Key Features:

• A return declared annually at the start of each year which cannot be withdrawn.• A return which smoothes stock market performance.• A return which is never negative.• No once off single contributions allowed

Capital Protection Fund

This fund is suitable for members approaching retirement as it gives the benefits of equityparticipation while at the same time ensuring that the value of the fund will not fall. It adoptsa cautious approach to investment with roughly two-thirds invested in cash and fixedinterest. Where clients wish to switch their pension fund out of the Capital Protection Fund,Irish Life may reduce the value they receive (this reduction excludes retirement or if youchange job). This fund also offers a minimum growth rate each year for funds that areinvested to retirement. This is a Low Risk Fund.

Key Features:

• Aims to give members the benefit of equity participation while at the same time ensuring that the value of their fund will not fall.

• Offers a minimum growth rate each year.


Individual Investment ServiceYour contributions are first invested in the Consensus Fund. As you approach retirement thefocus changes to protecting the value of your fund. To do this, each month beginning fiveyears before your nominated retirement date, Irish Life will switch some of your fund into theCapital Protection Fund. The total switched every year will be 20% of your fund. By the timeyou reach your nominated retirement date, 100% of your fund will be invested in the CapitalProtection Fund.

Your fund will be included in this investment strategy if you chose this option when youjoined the plan.

Statement of RisksThe benefits available to you from your AVC fund at retirement are determined by theamount of contributions paid and the investment return achieved on those contributions.The investment risk is borne by you, the member.The main investment risks facing you areset out below.

• Asset mix risk – the extent to which a members fund is diversified can determine thelevel of risk exposure. Equities in particular are assets which best out perform inflation over the long term , however over shorter periods can be quite volatile and therefore can influence the short term risk exposure of a members fund. Cash and Gilts/Bonds offer lower market risk,however their inflation risk is higher.

• Specific risk – excessive reliance on any particular asset.• Market risk – the risk that the value of an investment will decrease due to moves in

market factors, such as equity prices, exchange rates, interest rates and property prices.• Performance risk – underperformance of the selected funds and investment manager

compared to similar funds and other investment managers.• Inflation risk – inflation can erode the real value of investments. This risk needs to be

considered when evaluating investments such as cash and gilts/bonds.• Suitability risk – investment choice taking into account such factors as members age,

proximity to retirement and risk tolerance.

15

WARNING: The value of your investment may go down as well as up.The value of the fund may be affected by changes in currency exchange rates.Past performance is not a reliable guide to future performance.The income you get from this investment may go down as well as up.


What are the current charges under the AVC Plan?

(a) Investment Allocation --- the amount of each AVC that is invested.

Regular AVCs

There is a 4.00 % charge on your regular AVCs thus giving a 96% investment allocation.

Single Contributions

There is a 3.5% charge on any once off Single Contribution where there is no regularcontribution being paid thus giving a 96.5% investment allocation.

There is a 2.5% charge on any once off Single Contribution where there is a regularcontribution thus giving a 97.5% investment allocation.

(b) Annual Fund Management Charge - charge made by theinvestment manager.

Any accounting/audit costs will be paid for separately by UCD

The above charges cover all the costs of scheme administration and servicing, including theremuneration to PenPro Limited.

PenPro Ltd for the work they do are renumerated out of the above charges on thefollowing basis:

16

Fund Fund Management

All Indexed Market Funds and Regular Consensus Fund 1.00% p.a.

Active, Equity,Property, Cash, and Fixed Interest Funds 1.10% p.a.

Capital Protection and Secured Performance Funds 1.35% p.a.

Global Access Equity Fund 1.65% p.a.

Fidelity International Fund 1.85% p.a.

Year 1 Contribution: 1% x the number of years to retirement(subject to an overall max of 15%)

Year 2 and Subsequent regular Contributions: 3%

Single Premiums - with no regular contribution 3%

Single Premiums - with regular contribution 2%

(Charges applicable at booklet application date).


General Provisions of the AVC Plan

Can I withdraw some of my contributions from the Plan?

As long as you are employed by UCD you cannot withdraw your contributions from theplan.

What happens if I leave service?

If you leave and have less than 2 years service in the UCD pension scheme and are taking arefund of contributions from that scheme you must take a refund of the value of your AVCs.Any refunds are subject to 20% tax.

Having left service, if you cannot take or decide not to take a refund of the value of yourcontributions , your contributions remain in the plan and continue to earn investment growthjust like any other member of the plan. Your contributions can then be accessed when youactually retire.

Can I assign my AVC plan as security for a loan?

No. The Revenue Commissioners will not allow your AVC plan to be assigned or used assecurity for a loan.

What happens in the event of my death ?

The value of your AVC Fund at the date of your death will become available to the Trusteesto pay out, normally tax free, to your dependants or legal personal representative .

You may express in writing, by completing a ‘Letter of Wishes’ ,which sets out your wishesrelating to whom and in what proportion you would like the benefit paid. A Letter of Wishesis not legally binding, however your wishes would be taken into account by the employerand trustees when administering any death benefits. A ‘Letter of Wishes’ can be replacedby a new letter at any time.

A’Letter of Wishes’ letter is available from PenPro Ltd ( 01-200 0100).

Notes : The tax position outlined in this booklet is subject to any subsequent legislative changes whichmay occur.

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If you have short service and wish to consider increasing your retirement benefits youshould look in detail at the options available to you. You can choose between the AdditionalVoluntary Contributions (AVC) Scheme and the Notional Service Purchase (NSP) Scheme ordecide on a combination of both.You should contact your Pension and Benefits Section inUCD for details of the Notional Service Purchase Scheme. Both schemes aim to provideenhanced benefits at retirement, however there are significant differences between theschemes.

Features of the AVC Scheme

Contributions to the AVC scheme are invested in your chosen fund(s), the ultimate benefitsfrom which will depend on the term of the investment, investment returns over the periodand the amount contributed by you. The objective of the AVC scheme is to create a fund atretirement to provide benefits that meet your requirements. It is possible to be selective withregard to the benefits purchased under the AVC Scheme, for example you may wish toprovide a lump sum only, a pension only or a spouses pension only or a combination of thesebenefits. It is also possible to incorporate death benefits under the AVC Scheme to a fargreater extent than under the NSP Scheme.

Another significant difference between the two schemes is that the AVC scheme providesyou with access to an Approved Retirement Fund (ARF). In essence this means that atretirement you are no longer obliged to purchase a pension with your AVC fund. You caninvest your AVC fund in an ARF and withdraw income as and when you require it. Thisoption allows you to retain ownership and control of your pension fund in retirement andany monies remaining in your ARF will pass to your spouse or estate on death.

18

Appendix 1 - Notional Service and Additional Voluntary Contributions


Certain limits have been imposed by the Revenue Commissioners on contribution levels onwhich you get tax and PRSI relief (see page 5). The Revenue Commissioners have alsoimposed limits on the amount of benefit that can be provided.

The following limits apply at normal retirement to the the combined benefits of your UCDPension Scheme, Notional Service Purchase, retained benefits from anotheremployer and AVC Scheme:

These limits represent the maximum benefits allowed by Revenue upon normal retirementage and are ;

(A) 2/3rds of your final salary at normal retirement (at least 10 years service required)

OR

(B) A Tax Free Lump Sum( Gratuity) of 1.5 times your final salary

(at least 20 years service required)

and

A reduced Pension

Formulae (B) applies for anyone who is contributing to the UCD AVC scheme.

(Under Final Salary any fluctuating emoluments included (eg overtime) must beaveraged over final 3 years of service).

The maximum tax-free lump sum at normal retirement is one and half times your final salary.If you have less than 20 years service with your employer, your maximum decreases,depending on your actual service. Early retirement also reduces the maximum limits.

The maximum spouse’s pension payable on your death after retiring is 2/3rds of your finalsalary.

The rate at which your AVC pension (if you purchase pension) can increase in the course ofpayment could be limited in certain circumstances.

Appendix 2 – Revenue Maximum Limits on Retirement

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All enquiries or complaints on any aspect of the administration and investment of your AVCScheme should be addressed in the first instance to:

Martin SheenanManaging DirectorPenPro Limited14 Priory HallStillorgan,Co Dublin.

Tel: 01 2000100Fax: 01 2000101

Email: [email protected]

PenPro Ltd will immediately acknowledge your complaint and will do everything they can toresolve your complaint. In accordance with the procedures laid down by the PensionsOmbudsman, PenPro will keep you advised of the work they are doing to resolve yourcomplaint.

If you are dissatisfied with the response provided by PenPro Ltd you can contact the Trusteesof the UCD AVC Plan, Irish Pensions Trust Ltd, Oyster Point, Temple Road, Blackrock, CoDublin who will investigate the matter on your behalf. The Trustees will issue a Notice ofDetermination on the outcome of the investigation to the complainant.

In the event that you are dissatisfied with the response from the Trustees you may contact the Pensions Ombudsman, 36 Upr Mount Street, Dublin 2, (01 647 1650)who will examine your complaint and issue a Final Determination. The website atwww.pensionsombudsman.ie contains detailed information on how to make a complaint.

You may also contact:

The Financial Regulator, College Green, Dublin 2. Telephone (01 4104000).

September 2008

Appendix 3 – Complaints Procedure

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3105

cb (9

-8)

Penpro Ltd is regulated by the Financial Regulator.Irish Life Assurance plc is regulated by the Financial Regulator.

University College Dublin Additional Voluntary Contribution Plan


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