Can Company pay pension if Director not drawing a salary

G

gusss

Guest
Hi there

Hopefully someone can answer this straightforward question. If a Director is owed a lot of money from his company and decides to draw from this instead of charging a salary, is there any restriction on pension contributions by the company on his behalf during this time.

Best regards
gusss
 
Yes - the revenue maximum benefit is based around the final salary - so if no salary is being paid the revenue maximum benefit would be 0.
 
Just to be clear. If the Director is not drawing a Salary (Schedule E) then it is not possible to provide a pension. Equally, if the Director starts to draw a salary in the future, the years when no salary was being taken will not count as "service".
Only income that is deemed to be "earned income" (Sch E for employees) is pensionable. So if no earned income then no pension.
 
What about the case where the Director pays a salary of €1 a year for 20 years and then €200K a year for the last three years?

It's my understanding that such a person could based their pension fund around a final salary average of €200K...so a pension fund of about €5m would be possible?
 
Hi there

Many thanks for the replies. From what you are saying it would seem that the prudent thing is for the Director to draw a nominal salary and to take out any additional money required via his outstanding balance with the company.

Thanks again.
gusss
 
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