How much into pension

E

Eoghan

Registered User
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56
I pay 5% into my occupational pension and they pay 14%. I'm 32 so just to clarify should I be paying 1% avc's to max my contribution? Apologies for the basic question
 
Your employers contributions don't count towards the contribution limit of 20%. You can put in 15% into your AVC to max out your contributions if thats what you're looking to do.
 
I had the reverse understanding, that employer contributions count in the calculation of the maximum contribution. I cannot find any clear confirmation on revenue or citizen information web sites however at the minute, it's very obscure for the normal layman. The official documentation keeps referring to "my" contribution, which I conservatively assumed includes what the employer is giving as well to me on my pension pot, albeit indirectly.

ie: if I pay 5%, and my employer pays 6%, and I am between 30-39 yo (max contribution is 20%), I can only add 9% in AVC (to reach 20%), not 15%.

Could we have some additional confirmation here from Brendan?
 
This note from Mercer contains a useful summary of the current position -

[broken link removed]
 
At the same time, from Aviva explicitly says: "Up to age 39, combined contributions from you and your employer of up to 20% of your income may be eligible for tax relief", while the mercer note says the employer contributions do not count in occupational scheme (if I understand correctly).
 
In the case of a PRSA, the Employer and Employee contribution are added together in terms of the overall maximum limit.
However in the case of an "occupational pension" (Executive Pension or group type pension) the employee is limited to tax relief of 15%, 20%, 25%, 30%, 35%, or 40% - based on age. The Employer contribution is in addition (though there is an actuarial limit on the amount the Employer can contribute based on age and maximum benefits).
 
Eoghan,

19% overall is a very good contribution into a pension. Before increasing any amounts, look at the projected values and whether they will meet your income goals(which you probably don't have because 32 year olds have no idea how much they need in retirement!!). Also assess your short term needs and whether you need to be saving for something in the next few years.

19% is a very good base to be starting at so even if you don't increase contributions, you will do alright at that amount.


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