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Tax Benefits for pension contributions

You can get Income Tax relief against earnings from your employment for your contributions for these types of retirement plans:

  • Occupational pension schemes ( Group Pensions )
  • Personal Retirement Savings Accounts (PRSAs)
  • Personal Pensions
  • Additional Voluntary Contributions (AVCs)

Limits for tax relief on pension contributions

Tax relief for employee pension contributions is subject to two main limits:

  1. Age-related earnings percentage limit.
  2. Total earnings limit.

Age related earning percentages:

  • Under 30: 15%
  • 30-39: 20%
  • 40-49: 25%
  • 50-54: 30%
  • 55-59: 35%
  • 60 or over: 40%.

For example, an employee who is aged 42 and earns €40,000 can get tax relief on annual pension contributions up to €10,000.

Total Earnings Limit

The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.

What Tax Relief do I get :

Income Tax relief is given at your ‘marginal’ (highest) Income Tax rate.
There is no relief from Universal Social Charge (USC) or Pay Related Social Insurance (PRSI) for employee pension contributions.

PRSAs

  • Employer PRSA contributions are:
    • deemed for tax relief purposes to be made by the employee
    • added to the employee’s actual contributions to determine if the above limits are reached
    • treated as a taxable employer benefit received by the employee.
  • Tax relief for PRSA AVCs is based on the appropriate age-related percentage limit of the income from the employment in question, as reduced by any employee contributions to the pension scheme relating to the employment.
  • You may pay a once-off or special pension contribution after the end of a tax year but before the following 31 October. If you do, you can choose, on or before 31 October, to have the tax relief for the contributions allowed in the earlier tax year. When you use the Revenue Online Service (ROS), the deadlines for paying contributions and making this choice are extended.
Pension Type Employer
Contributions
Employee / Individual
Contributions
Occupational Pension Employer must make a meaningful contribution
Tax deductions available for employer
No income tax / USC/ PRSI for employee on employer contributions
Income tax relief only
RAC Employer contribution not permitted Income tax relief only
PRSA Tax deduction available for employer.
Employer contribution regarded as taxable income for the employee.
Income tax relief only on both employee and employer contribution.
Employer PRSI not chargeable on employer contribution.
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