# Finance Bill 2022: unlimited employer contributions to PRSAs permitted from 2023?



## LDFerguson (21 Oct 2022)

Some interesting developments in the pensions area in the Finance Bill, published yesterday.  If it is signed into law in December unaltered it will allow employers to make much larger contributions to a PRSA than were permitted.  At the moment, there are those who interpret the bill as saying that employer contributions to PRSAs will be unlimited.  Others believe that employer contributions to PRSAs will be the same as what was previously allowed under Occupational Pension Schemes, i.e. very generous limits.  Either way, it's a big improvement for PRSAs.  

Looks like from 2023 onwards, the choices for employees and directors of smaller companies (including one-employee companies) will be Master Trust Occupational Pension Schemes or PRSAs.

More details here.

Regards,

Liam
www.FergA.com


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## Steven Barrett (21 Oct 2022)

I saw the headline, haven't read the detail of the Finance Bill yet. it will certainly make a difference for people who take a relatively small salary from their business. With no funding limits, they can just load up on their pension contributions.


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## Towger (21 Oct 2022)

I read that change as employer contributions to PRSAs no longer being 'treated' as a (non taxable) BIK and included in Gross Pay.  In other words treated the same as employer contributions to a normal pension scheme.


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## LDFerguson (21 Oct 2022)

Towger said:


> I read that change as employer contributions to PRSAs no longer being 'treated' as a (non taxable) BIK and included in Gross Pay.  In other words treated the same as employer contributions to a normal pension scheme.



But employer PRSA contributions are also no longer to be subject to the age-related tax relief limits as they are now.


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## Conan (21 Oct 2022)

LDFerguson said:


> But employer PRSA contributions are also no longer to be subject to the age-related tax relief limits as they are now.


Liam 
Is that the Case? The Bill refers to PEPP's and still includes the age limits for tax allowed contributions .


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## LDFerguson (21 Oct 2022)

Conan said:


> Liam
> Is that the Case? The Bill refers to PEPP's and still includes the age limits for tax allowed contributions .



I suppose I'll have to wait until the pension companies' legal people have fully taken it apart, but it certainly looks that way to me.  

In the Explanatory Memorandum on Page 7 it says...

_Section 18 amends section 118 of the TCA 1997 to exempt an employer contribution to an employee’s PRSA or PEPP from an income tax charge to Benefit-in-kind (BIK). This is a recommendation of the Inter-departmental Pensions Reform and Taxation Group (IDPRTG). *The section also deletes subsection (2) of section 787E TCA 1997, which treated both employer and employee contributions to a PRSA for the purposes of the tax relief as if they had been made by the employee. This is no longer required following the abolition of the BIK charge.*

_


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## Gordon Gekko (21 Oct 2022)

It’s seismic.

For someone who has just started work, the employer can contribute €1bn, for example. The only constraint is the €2.15m.


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## Conan (21 Oct 2022)

Thanks Liam. My reading was that the Employer contribution to a PRSA would no longer be treated as a BIK but that the total  age limits would still apply (as with PEPPs). The Bill specifically includes the age limits in dealing with PEPPs.


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## T McGibney (21 Oct 2022)

Gordon Gekko said:


> It’s seismic.
> 
> For someone who has just started work, the employer can contribute €1bn, for example. The only constraint is the €2.15m.


Sounds too good to be true, and this is Ireland, so we can safely assume it is too good to be true.


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## LDFerguson (21 Oct 2022)

T McGibney said:


> Sounds too good to be true, and this is Ireland, so we can safely assume it is too good to be true.



As I think about this I'm inclined to agree that it does sound too good to be true.  One of the pension companies believe it to be true.  However, reading PwC's Finance Bill summary, they seem to be of the opinion that employer contributions to a PRSA will be elevated to the same levels as employer contributions to Occupational Pension Schemes which will still be a huge improvement for PRSAs.  I think I'll edit this post until the position has been clarified.


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## Oisin19 (21 Oct 2022)

Gordon Gekko said:


> It’s seismic.
> 
> For someone who has just started work, the employer can contribute €1bn, for example. The only constraint is the €2.15m.


Section 81 of the tca would rule that out. I’d imagine this will ironed out to equalize the funding as that appears to have been the idea with the reference to the tax report


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## jasdpace@gmail. (21 Oct 2022)

Gordon Gekko said:


> It’s seismic.
> 
> For someone who has just started work, the employer can contribute €1bn, for example. The only constraint is the €2.15m.



From what I've seen, if the billion is lobbed into Standard Life's GARS at the beginning of one's career, then it would be unlikely that the €2m threshold would be breached by the time retirement comes around.


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## Gordon Gekko (21 Oct 2022)

Oisin19 said:


> Section 81 of the tca would rule that out. I’d imagine this will ironed out to equalize the funding as that appears to have been the idea with the reference to the tax report


I’m talking about the position as it stands.

As things stand, and based on the legislation as presented, an infinite employer contribution to a PRSA is possible. 

Your reference to Section 81 TCA 1997 is foolish; if commercially an employer wants to pay an employee, say, a €1bn employer pension contribution, than that’s deductible.


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## Oisin19 (22 Oct 2022)

How is it foolish? It is the section that gives the deductibility? You don’t think it should be considered by a company when making a business expense? In what scenario could you just employ someone and pay them 1bn?


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## Gordon Gekko (22 Oct 2022)

Oisin19 said:


> How is it foolish? It is the section that gives the deductibility? You don’t think it should be considered by a company when making a business expense? In what scenario could you just employ someone and pay them 1bn?


A scenario in which they’re employed and paid €1bn.


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## sunnyside (23 Nov 2022)

Hi All
Has there been any update on this ?

Is it still uncapped ?

Tks


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## Steven Barrett (24 Nov 2022)

sunnyside said:


> Hi All
> Has there been any update on this ?
> 
> Is it still uncapped ?
> ...


No update which means it is still uncapped. Finance Bill is usually signed into law at the end of the year. I think it was signed into law on Christmas day last year.


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## Smoneen (24 Nov 2022)

Finance Bill 2022 is still going through the stages of the house. You can track the activity and debates here:









						Finance Bill 2022
					





					www.oireachtas.ie
				












						Dáil Éireann debate - Wednesday, 23 Nov 2022
					

Finance Bill 2022: Report Stage Dáil Éireann debate - Wednesday, 23 Nov 2022



					www.oireachtas.ie


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## sunnyside (24 Nov 2022)

Thank you


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## willielovesall (15 Dec 2022)

It looks like this bill is due to be signed into law. Am I correct in saying that companies can now make larger contributions to an employees pension?


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## LDFerguson (16 Dec 2022)

willielovesall said:


> It looks like this bill is due to be signed into law. Am I correct in saying that companies can now make larger contributions to an employees pension?



To date there have been no amendments to the bill.  So if President Higgins signs it in the next week or two, then yes employers will be able to make larger contributions to PRSAs from 1st January 2023 onwards.


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## backfire (3 Jan 2023)

The Finance Bill seems to have been signed into law https://www.oireachtas.ie/en/bills/bill/2022/101/

Does anyone know if this now means that Employer PRSA contributions will no longer be combined with Employee PRSA contributions when taking into account age related max contributions?  
i.e. were there amendments which negated this welcome change.  I can't figure it out


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## Marc (3 Jan 2023)

Employers will this year be able to pay unlimited contributions to a Personal Retirement Savings Account (PRSA) free from any Benefit in Kind charge (BIK) subject to the PRSA provider being willing to accept the contribution.

The contributions to a PRSA are not limited by salary and service or existing or retained benefits as now apply to funding under the occupational pension scheme rules.

We believe that this favourable change to PRSAs was not intended in the legislation and will most likely be amended in due course. 

everlake.ie


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