# Pension and Tax



## Radiowriter (27 Jun 2008)

Hi,

I currently have a work pension and an PRSA AVC.  I contribute monthly to both.  For tax purposes, am I better to stick to both pension contributions or divert a larger amount into just the PRSA?  I'm about to change jobs so a good time to look at it.

Thanks.


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## LDFerguson (27 Jun 2008)

There's no difference from a tax perspective. You need to compare the terms and conditions of the main scheme with those of your AVC PRSA. 

If you change job, make sure you or your broker reviews your AVC PRSA so that it's still appropriate.


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## Radiowriter (27 Jun 2008)

Thanks.  On my tax credits cert I have allowences for Retirement Annuity Relief and Personal Retirement Savings.  I guess the second is the PRSA.  I'm worried about loosing the first if I stop the work pension.


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## ClubMan (27 Jun 2008)

LDFerguson said:


> There's no difference from a tax perspective.


But with the occupational pension contributions get tax and _PRSI _relief at source whereas with the "standalone" _PRSA _you need to claim tax and (only after tax relief has been granted) _PRSI _relief manually so the latter is a bit more hassle.


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## willbee (27 Jun 2008)

Hello Radiowriter, a quick question. To get Retirement Annuity Relief and Personal Retirement Savings on your tax credit cert, what did you do to or how did you inform revenue?


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## ClubMan (27 Jun 2008)

The occupational pension contributions should be dealt with at source via payroll and should not be reflected on the statement of tax credits!


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## willbee (27 Jun 2008)

And how do you inform the revenue about the PRSA on the tax credit statement. Send them a copy of a letter from PRSA supplier??


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## ClubMan (27 Jun 2008)

To claim tax relief you send them a copy of the _PRSA1 _certificate from the _PRSA _provider. Include a brief covering letter explaining why you are sending it and what relief you are looking for. They grant tax relief as a lump sum (for lump sum contributions) or via the statement of tax credits (for ongoing contributions). At the end of the tax year you can then claim _PRSI _relief manually. The _Key Posts _cover this.


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## willbee (27 Jun 2008)

Thanks Clubman, I appreciate it.


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## LDFerguson (27 Jun 2008)

ClubMan said:


> But with the occupational pension contributions get tax and _PRSI _relief at source whereas with the "standalone" _PRSA _you need to claim tax and (only after tax relief has been granted) _PRSI _relief manually so the latter is a bit more hassle.


 
Very true.  

Radiowriter, I think there's something wrong with your tax credits.  As Clubman points out, the tax and PRSI relief in respect of your "work pension" should be dealt with by payroll and therefore not appear on your Tax Credits Certificate.  

"Retirement Annuity" on a tax credit certificate usually refers to contributions to a Personal Pension Plan.  Did you have one of these in the past and perhaps forgot to tell Revenue when you ceased contributions?


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## Radiowriter (27 Jun 2008)

Hi All,

Thanks for the replies.  Glad I asked now as the Tax credits were incorrect.  Now sorted!


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## MHarbour (9 Jul 2008)

I hope its ok to piggyback this thread on a related issue. I also hope that this hasnt been covered in the key posts as I have read most but tend to get confused as I go along. 

Anyway, the crux of the issue may be a simple yes/no answer. When you reduce your PRSA contribution every month, do you need to inform revenue, or is it done automatically?

Thanks for your time.


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## ClubMan (9 Jul 2008)

MHarbour said:


> When you reduce your PRSA contribution every month, do you need to inform revenue, or is it done automatically?


If the contributions are made via payroll and tax/_PRSI _relief granted at source then the relief will be adjusted automatically. If it is a "standalone" pension then you need to inform _Revenue _and they will adjust your tax credits.


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## MHarbour (9 Jul 2008)

Thanks very much Clubman.


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## suzie (2 Sep 2008)

Just piggy backing on this thread, 

If in a tax year one contributes €X to a pension, but this is over their age limit (say 20% of the reckonable income), can the surplus (for which tax was still applied) be carried over to the next year.

I ask as sections on Form12 give that impression to me?

Thanks
S.


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## LDFerguson (2 Sep 2008)

suzie said:


> If in a tax year one contributes €X to a pension, but this is over their age limit (say 20% of the reckonable income), can the surplus (for which tax was still applied) be carried over to the next year.


 
Yes, and if the limit for tax relief has been exceeded by a large amount (say you put in 45% when the appropriate limit was 20%) the excess can be carried forward into a number of future years until it is used up.


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## suzie (5 Mar 2009)

Hi Liam, 

can the reverse be done. ie take excess contributes in 2009 and apply them to your 2008 contributions?

Thanks

S.


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## Jester (7 Mar 2009)

If you have paid excess in 2009, then you can backdate to 2008, as long as you claim this by 31/10/2009 (or 17/11/2009 for ROS) and do not exceed the amount allowed for 2008.

On the PRSAs - one thing that you need to bear in mind is that if your employer contributes to the PRSA, then this is part of your overall relief allowed - for example if you are under 30 and your employer pays 5%, you can only pay 10%. Whereas in an occupational scheme, your allowance would be 15% overall.


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