Employee V's Employer PRSA contributions

[Easel]

Hi,

I currently pay €1,000 p/m into a PRSA and nothing is paid in by my employer.

I currently pay tax at the higher rate so my €1,000 contribution costs me €600 net p/m.

If I was to ask my employer to reduce my salary by €1,000 p/m and pay it into the PRSA as an er contribution it would appear to save me €120 p/m. Would this cost the employer anything other than the €1,000?

Anything I need to look out for here?

Many Thanks

Easel

 

[Conan]

That won’t work. The Revenue has a rule which prohibits “salary sacrifice”. So if you are currently paying €1,000pm the Revenue might query a situation where you stop contributing and your salary reduces by the same amount at the same time.
What might be a better strategy is to get your employer to contribute in the future in lieu of a salary increase. The net cost to the employer is the same, in fact the employer makes a small saving as the pension contribution is not subject to employers PRSI (whereas the salary increase would be).