pension top-up

T

tomred

Registered User
Messages
42
Hi

I was hoping for some advise with regard to 2 aspects of my pension.

1. I started with a new employer early in the year and there is a clause in the contract in which they do not contribulte to my pension until 6 months have gone by (not backdated). This means I was not making any pension contributions for the 1st half of the year. Is there a way that I can make up these contributions. I have heard about AVC's but do not know much!

2. since my pension got started I am paying 15% (employer 10% and also 5% taken from my salary). I am 33 so am allowed to invest 20% into my pension. How would I go about investing this extra 5% (and getting the appropriate tax benefit). I contacted Quinn Life but they advised that I could not take out a personal pension if I already had a work pension.

Thanks
 
The answer to both questions is probably 'AVCs' - additional voluntary contributions to your salary, but you'll need to check with your employer to see what AVCs they facilitate.
 
since my pension got started I am paying 15% (employer 10% and also 5% taken from my salary). I am 33 so am allowed to invest 20% into my pension. How would I go about investing this extra 5% (and getting the appropriate tax benefit). I contacted Quinn Life but they advised that I could not take out a personal pension if I already had a work pension.
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Remember that you personally are allowed to put 20% into a pension regardless of what your employer puts in.

Also AVC's can be backdated to the previous tax year provided it is done by 31/10 eack year. If going this route remember to apply to revenue to collect the tax. I understand you have to apply to welfare to get a return of the PRSI element.
 
asdfg said:
Remember that you personally are allowed to put 20% into a pension regardless of what your employer puts in.
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I don't think that this is correct and believe that the relevant tax exemption limits apply to aggregate (employee plus employer) contributions.

I understand you have to apply to welfare to get a return of the PRSI element.
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Yes - see here.
 
Clubman,

I think it depends on the type of pension scheme you are in. If it is a defined benefits scheme then you are allowed make AVC up to the max allowed by revenue regardless of the amount paid by your employer. Assumed similar happens in a defined contributions schemes.
 
I am in a defined contribution employer PRSA and was informed (by somebody generally reliable on these matters and who contributes to AAM) that the tax relief limit applied to aggregate employee plus employer contributions.
 
Maybe this is peculiar to PRSAs but see this [broken link removed]:
Limit to relief for pension contributions

 The limit to tax relief for contributions apply to all pension contributions made by the taxpayer and contributions made by their employer to a PRSA. Pension contributions means contributions to a PRSA, to an RAC, to an employer sponsored pension scheme or to a statutory pension scheme. In addition, the maximum income on which the aggregate tax relief for contributions can be calculated is €254,000. To the extent that aggregate contributions exceed the allowable amount, the contributions are carried forward to the following year and treated as paid in that year.
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Just to further clarify...

(1) Age-related limits apply to total of Employer and Employee contributions to PRSAs. No limit on how big the fund may grow to, or the resulting pension / lump sum benefits.
(2) Age-related limits apply only to personal contributions and AVCs in Occupational Pension Schemes. In other words, in an OPS a 35 year old can contribute a total of 20% to an ordinary Employee contribution and/or AVC, regardless of how much the Employer is also putting in. In an OPS, there are, however, maximum benefit limits, i.e. 2/3 final salary etc. There is no distinction between a Defined Benefit Scheme and a Defined Contribution Scheme for these purposes.

Liam D Ferguson
www.prsacentre.com
 
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