making up lost months of pension payments

[springfinance]

I am 30 and have not been contributing to a pension for the last 9 months.
I know for my age "tick box" the maximum one can contribute (tax free) to a pension is 20% of a salary.
I would like to make up for some of the months I have missed paying into a pension.

I assume if I contribute say up tp 30% per month until the end of the year that I will still be able to do this tax free as I would not have used up 20% of my salary for the year yet.

I have some savings I could put in as a lump sum. Would it be wiser to contribute this to the prsa as one payment? Will I still receive the tax benefits? ( as long as it all at the end of the year adds to less that 20% of overall salary. )

I want to balance out to about 10% of salary each month.
Do you think 10% per year is enough of a contribution at the age of 30?

 

[Guest]

> I assume if I contribute say up tp 30% per month until the end of the year that I will still be able to do this tax free as I would not have used up 20% of my salary for the year yet.

You can contribute up to 20% with full tax, PRSI and health levy relief in any one tax year. You can contribute up to 20% in respect of the previous tax year before October 31st in any year.

> I have some savings I could put in as a lump sum. Would it be wiser to contribute this to the prsa as one payment?

It depends. If you consider your pension underfunded then it makes sense to top up as soon as possible to get the money earning for retirement. You will get full tax, PRSI and health levy relief on any contributions up to the 20% limit - in the same year or retrospectively for the previous year if made before October 31st. One slight risk with a lump sum contribution is that tall of the money is hitting the markets in one go and this could be advantageous or disadvantageous in terms of growth compared to drip feeding it. However you have no control over the markets so shouldn't worry about this if you have decided that you need to top-up.

> Do you think 10% per year is enough of a contribution at the age of 30?

No easy answer. It depends on your salary, your pension income targets, future market performance, charges levied on your plan etc. If in doubt get independent professional advice. There are some calculators that might help you crunch the numbers on this: