SSIA related Pension Incentive Tax Credit Scheme

Would this be a good deal if one were already contributing max AVC to a pension, can this SSIA top-up be claimed also.

For example, for someone earning the max €50k who were contributing 15% to a pension already (let's assume that 15% is their max), they'd already be contributing €7,500 p.a. (15% of 50k).

Could they also put a further €7500 from the SSIA into their pension and avail of the €1-in-3 as well, as they're only availing of one tax relief on each 7.5k?
 
I believev Kruger is correct: if your total fund after the tax free lump sum is under 15000, you may be allowed to take the balance as a taxable lump sum under paye instead of having to amrf/annuity it. this is by revenue concession.

eg I have 18000 in PPP, at 60+ I retire take 4500 (25%) tfls.
even if I havent funded an amrf with 63500 before or an annuity or a pension/annuitiy giving 12700pa, with revenue concession I don't have to amrf/annuity the remaining 13500 as it's under the 15k floor, but can take it as a lump sum subject to paye.
Note, this is with revenue concession.
 
Guest,
My only disagreement with Kruger is that one cannot get the "lot" tax-free. The Trivial Pension provision still means you pay tax on the 75%.
The Revenue rules state that you can avoid the ARF/AMRF rules "if due to the size of the fund you cannot establish an AMRF".

My overall point is this SSIA Incentive is only of any real value to non-tax payers (stay-at-home spouses etc). If you are paying tax at the top rate, you are better off claiming tax relief in the normal way. Even for Standard Rate tax payers, the SSIA Incentive is of little or no value.

So I find it hard to see how this will do anything to encourage more people to save for retirement. It's a three card trick.
 
To me this seems absolutly pointless. If you take the example of a 35 year old earning €45k in a work pension fund but not paying any AVC's. Whats the point in paying in a lump sum of €7,500 if all you get is €10,000 (a 25% incerase).

Surley it's a much better idea to max out your AVC contributions for a year (for example) and get tax and prsi relief. To put €10,000 into your pension would only then cost €5,200.

It doesn't take Eddie Hobbs to work this one out!!
 
if you're a non tax payer with an ssia coming in, it's an extra 2500 that you're not going to get anywhere else, as with revenue approval you wouldn't have to fund an amrf.

agree it doesn't do higher rate payers any good.

but if it helps the least well off elderly, I think their case deserves a look too.
 
A couple,one of whom has no earnings(homemaker), are assessed jointly for tax and the marginal rate is 42%. The home maker transfers E7500 from her SSIA to a PRSA.
What tax rate will apply to a withdrawal of E10000(=7500+2500 Gov top-up) from the PRSA FUND?
 
Conor Mc;
Good point; If your pension contributions are already maxed out for tax relief, then this SSIA Incentive Scheme appears to allow you to up your fund by another 10k while still getting some benefit from the Exchequer.

For example a person approaching retirement age with an under-funded pension might find this attractive. Tax relief is allowable, I think, up to 50% of earnings if you're over 60. If you're belatedly trying to cram your pension fund, this seems a worthwhile option, but only after you've used your full tax relief entitlement.
 
Conan said:
If this is the case then for top rate tax payers it makes no sense, since you are giving up 42% PAYE +6% PRSI relief. So the total value of €10,000 has cost you €7,500 net, as opposed to investing €10,000 personally and claiming the 48% tax relief (a net cost of €5,200)
Click to expand...

I'm trying to figure this one out... I have a company pension but as I haven't paid in any AVCs so far was thinking of topping up with my SSIA. I'm in the top tax bracket... so sounds like I'd be better off starting to pay regular payments into an AVC rather than making a one-off payment with my SSIA - correct??
 
Hi Bramble

You are correct - paying the AVC and getting income tax relief would be the best bet for you.

The Government Incentive Route would be the best route for someone that is already maxing their AVC OR someone that pays no income tax OR (debatable) someone paying income tax at the basic rate of tax.
 
You must log in or register to reply here.
Back
Top