# Maximum Contribution in Director Pension Fund



## wildgoose (21 Jun 2007)

Hello

I am an Irish but currently living and working in France. I am about to become a director of an Irish company.

Instead of drawing down a salary in Ireland (and getting caught for double tax), I want to take pension fund contributions of about 50K per year.

I have searched the forum and I understand that I can build up a pension fund as long as it is not overfunded (little danger of that).

http://www.askaboutmoney.com/showthread.php?t=55353&highlight=director+pension

However, I've seen other information that the company pension contribution for a director has a (generous but fixed) percentage of salary.

My reasoning is that I am in my late 30s and have only a small fund at the moment with Eagle Star, about 70K, so I'd like to start building up a proper fund.

Some questions:
-do I need to be an 'owner director' with a certain percentage of the company shares?
-is it OK for me to be making contributions to my Irish pension fund while still living abroad?
-is it possible for a director to take pension contributions if not drawing down a salary?
-what sort of pension fund should I set up?


Thanks


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## LDFerguson (21 Jun 2007)

If you want to set up an Irish director's pension, you must have salary in Ireland from the company.  Maximum funding levels are calculated by reference to your anticipated salary at retirement (which is calculated by taking your present salary and rolling it up using reasonable assumptions).  If your present salary is zero, then your anticipated salary at retirement will also be zero, therefore the allowed contributions will also be zero.  

Liam D. Ferguson
www.ferga.com


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## wildgoose (21 Jun 2007)

So are you saying that the company pension contributions as a director have to be directly related to the salary in that same company?

That must be inconvenient for people that have multiple employments having to manage contributions from multiple sources with different anticipated final salaries.

I am currently employed in France. There's pension contributions going into the black hole that is French state pension scheme. I'll never see a cent of that money. Hence the need to fund a pension in Ireland (also Irish pensions are shielded from French taxes).

There's some information that I did not provide
-there is no Irish company pension scheme, I have to set up something and its flexible what I do
- I eventually expect to take up employment with the company as both a PAYE worker and director - so it's possible to have an anticipated final salary even if there's no salary drawdown for the first few years. I can get documents (employment contracts) produced to support the fact that I plan to have a salary.


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## LDFerguson (21 Jun 2007)

When setting up the Irish scheme, I suppose you could insert your anticipated salary on the pension application form. This might or might not work - the scheme has to be approved by Revenue and I'd need to check if Revenue will approve a scheme where their own records don't indicate you as a salaried employee.


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## wildgoose (21 Jun 2007)

Do I need to get approval for a "scheme" if the pension contributions are to an old style personal pension plan that I already have with Eagle Star?


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## LDFerguson (21 Jun 2007)

Your company cannot pay contributions into a Personal Pension.  

A company can pay contributions into a PRSA on behalf of an employee without need for individual Revenue approval, but to be honest I've never yet come across a situation where a company wanted to pay into a PRSA for a director who was taking zero salary.  So I'm not sure what Revenue's position would be when the company was filing it's tax returns and claiming a deduction for the PRSA.  It may be possible but would require investigation.


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## boaber (22 Jun 2007)

LDFerguson said:


> Your company cannot pay contributions into a Personal Pension.



Is it not the case that if an employer pays contributions to a personal pension, the employee will be taxed on these as a benefit in kind. The employee can then claim income tax relief on these contributions as if he or she had paid the contributions?


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## LDFerguson (22 Jun 2007)

Sorry - yes - should have made my statement clearer.  Your company cannot pay contributions into a Personal Pension in the same way as an Occupational Pension Scheme.  Given that wildgoose seems to have no taxable income in Ireland with which to claim back tax relief, I don't think it would be efficient for his company to pay into his Personal Pension.  

Thanks for the clarification.


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## wildgoose (23 Jun 2007)

I've just worked out that it's possible to draw down about 25K as a salary in Ireland with out paying any PAYE tax due to tax credits, just director's PRSI.  That means I should be able make a pension contribution as well - hopefully at least as much again since I'm underfunded.  

So the next question - how is this done?  Does it have to be paid into a company scheme (not a problem - there's other staff and directors that woudl participate) or is there such thing as an individual director's pension?


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## Guest126 (25 Jun 2007)

The individual directors pension does exist - and would give more flexibility and privacy to a director who required these features.


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