Anything stopping me paying above limit

[wanttoretire]

As the title suggests, is there anything stopping me paying a lump sum or monthly into my PRSA. I max out my limit with my employer but due to the tax free growth allowed within a pension I am considering putting some money into a seperate PRSA to avoid the 41% exit tax, cgt and dividend tax due on other types of investments. I have some seperate investment funds (etf’s) and company shares so I am not worried about all of my money being ‘tied up in a pension’. But I just want to make sure that I am not missing anything obvious here. TIA for any advise/thoughts

 

[ClubMan]

You can contribute more than your age related tax relief limit but you just won't get tax relief on the excess.

Tax relief limits on pension contributions

This page outlines the tax relief limits on pension contributions

www.revenue.ie

But it may not make sense long term to put money into a pension that has been taxed at up to 52% only to draw it down at retirement and possibly pay tax again on it. Even allowing for the tax free lump sum and tax free growth in the meantime.

 

[Brendan Burgess]

I am considering putting some money into a seperate PRSA to avoid the 41% exit tax, cgt and dividend tax due on other types of investments.

If you invest €100 of your own money in shares directly, you will pay CGT and Income Tax on any gains or dividends.

If you put the €100 into a pension fund, while the fund will accumulate tax-free, you will pay Income Tax on the €100 and the Capital Gains and the Dividends when you draw down the pension.

Furthermore, given that pension reliefs could well change by the time you retire, it's just not a good idea.

 

[Savvy]

If you put the €100 into a pension fund, while the fund will accumulate tax-free, you will pay Income Tax on the €100 and the Capital Gains and the Dividends when you draw down the pension.

It took me a second read to get what you meant but initially I read it as you would pay CGT and Dividends separate to the Income tax.
But of course you meant you would pay Income tax on the €100 and on any additional growth.

 

[GSheehy]

What's your estimated pension fund at normal retirement age?

 

[wanttoretire]

Thank you for the replies.
If I continue to contribute as today, and with a conservative 5% return, my estimated pension fund currently is 2.7m. But to be honest, I plan to retire much earlier than 'normal' retirement age and have been thinking of ways to boost my retirement funds. I understand I will pay income tax on any drawdown, but I am still of the thought that this would still outweigh the tax that would be paid on any personal investments. Unless, of course, the 41% exit tax is abolished today!!! or perhaps the deemed disposal is removed and rate of tax is reduced!

 

[ClubMan]

I understand I will pay income tax on any drawdown, but I am still of the thought that this would still outweigh the tax that would be paid on any personal investments.

You might think that but can you illustrate it with worked figures?