Buying Back HSE Years

I got a quote from the HSE it will cost me approx €4.5k to buy back my student midwife years. Approx €200 a month for the next 2 years. What I was wondering would I be better off tax wise to pay monthly or pay it off in one go? As I thought pension contributions are tax deductable....

Thanks

Whether you choose to pay up-front or in instalments, tax relief is available on your contribution, subject to the usual age-related limits for tax relief. The last government set out plans to reduce tax relief for high-rate taxpayers on pension contributions from 41% to 20% on a gradual basis, starting in 2012. The recent pensions levy of 0.6% on private funds (which doesn't apply to the HSE superannuation schemes) was intended to replace these plans. Enda Kenny said so on the Late Late Show. Worryingly, there's been no official confirmation yet that the plans to reduce tax relief on contributions have been scrapped. I hope this doesn't turn out to be an Enda Kenny U-turn.

Anyway, if you pay up-front AND the €4,500 is within your tax relief limits AND you're a higher-rate taxpayer, you're sure of getting your full tax relief.

Liam D. Ferguson

You might want to consider the risk of Govt default. Are you really happy to pay over extra contributions to the Govt, given that there are some doubts about whether the Govt will be able to pay out the pensions in the future?

See http://www.askaboutmoney.com/showthread.php?t=157193 for some discussion on this.