Cost of PRSA to Employer

S

Sweet Pea

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I have been given a small pay rise. I work for a small company and have never had a pension. Although my employer does not provide a pension scheme to employees, they suggested it may be wise to put the pay rise (€2000 per annum) into a pension scheme of my own as I'm in my forties.

I have researched PRSA's and it looks like my employer is obliged to provide access to a standard PRSA, although they are not obliged to contribute to it.

I was going to go back to my employer and say that I'm happy to put the €2000 per annum into a PRSA if they can make the payroll deductions etc. My main question is, would it be worth asking my employer to make a small contribution too? As the employer's contribution is tax deductible, is there any way of working out how much it would cost them to top up? For example if they gave me the pay rise of 2k per annum which I put into a PRSA and they put 1K per year into it themselves, how much would it cost them?

For example if my employer topped up the PRSA by 1k per annum but it only cost them €400, it would be well worth asking them to top it up by 1K!

Also, are there any links which explain to an employer, the benefits of topping up an employee's PRSA (tax relief etc) which I could show them?

Many thanks
 
If your employer gives you a salary increase of €2,000 it costs them €2,200 because of the additional Employers' PRSI

So, if they contribute €2,000 to a pension scheme on your behalf, it saves them €200.

So it would be reasonable to ask them to contribute €2,200 in lieu of a salary increase.

Brendan
 
Sweet Pea said:
I was going to go back to my employer and say that I'm happy to put the €2000 per annum into a PRSA if they can make the payroll deductions etc. My main question is, would it be worth asking my employer to make a small contribution too? As the employer's contribution is tax deductible, is there any way of working out how much it would cost them to top up? For example if they gave me the pay rise of 2k per annum which I put into a PRSA and they put 1K per year into it themselves, how much would it cost them?

For example if my employer topped up the PRSA by 1k per annum but it only cost them €400, it would be well worth asking them to top it up by 1K!

Also, are there any links which explain to an employer, the benefits of topping up an employee's PRSA (tax relief etc) which I could show them?

Many thanks
Click to expand...

They are obligated to provide a payroll deduction facility for a PRSA contribution. They also have to give you time off to talk to the advisor about the PRSA.

If they are making a contribution in addition to the pay rise they gave you, they get a 12.5% saving on it as it is deducted as a business expense. So if they put in €1,000, the real cost is €825.

This differs from Brendan's answer as he was referring to redirecting the €2,000 as salary to a pension instead.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Many thanks Steven - yes my husband would be paying the €2000 into the PRSA so my question was in relation to how much it would cost the employer to top this up....
 
Well, it would cost the employer the amount that they top it up by. But they claim the pension contribution as a business expense against corporation tax which is 12.5%.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
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