This site is not intended as a substitute for professional advice. There is a world of difference between the often useful tidbits of wisdom offered here and proper advice tailored to the recipient's circumstances.As Protocol said, ask here. Are some very knowledgeable posters, including financial advisers, who provide advise for free!
You are correct. I have edited my post to make that clear.This site is not intended as a substitute for professional advice. There is a world of difference between the often useful tidbits of wisdom offered here and proper advice tailored to the recipient's circumstances.
Age | Percentage limit |
Under 30 | 15% |
30-39 | 20% |
40-49 | 25% |
50-54 | 30% |
55-59 | 35% |
60 or over | 40% |
Thank you ProtocolTax relief limits on pension contributions
This page outlines the tax relief limits on pension contributionswww.revenue.ie
Tax relief limits on pension contributions
Tax relief for employee pension contributions is subject to two main limits:
- an age-related earnings percentage limit
- and
- a total earnings limit.
Age-related earnings percentage limits
You can get tax relief up to the relevant age-related percentage limit of your earnings in any year.
You might have more than one source of income. If you do, this relief is only from the source of income in respect of which the contributions are made.
Age-related percentage limit for tax relief on pension contributions
For example, an employee who is aged 42 earns €40,000 per year. They can get tax relief on annual pension contributions up to €10,000.
Age Percentage limit Under 30 15% 30-39 20% 40-49 25% 50-54 30% 55-59 35% 60 or over 40%
Total earnings limit
The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.
Employer contributions to an employee's scheme are not taken into consideration when calculating the employee's earnings threshold.
Thanks for that info! Yeah, that’s a good shout about fees and charges, I’ll need to investigate that. I’m hoping because it’s a group scheme that the company will absorb a lot of themYou should contribute the max amount you can/allowed (as per post above). Ideally that will be in the top rate of tax. You can use your saving to invest for the 2022/23 tax year up till 31st Oct this year, I believe.
You also need to make sure you are in an appropriate fund type for your risk appetite and investment timeframe.
The other thing you want to watch out for is charges. They will eat into any growth and potential returns. Even seemingly small amounts/percentages can have a big impacts over even a medium timeframe. I appreciate you can't shop around on a company scheme however if the charges were very high, you can set up AVC's (Additional Voluntary Contributions) with a separate provider with lower charges.
Thank you Protocol
That’s all very clear and makes sense. I had one question around AVCs. In my case my percentage limit is 25%. Just say by the end of this current year my AVCs for the year added up to 18% of my gross pay. That would mean that there was 7% of my limit that I didn’t utilise. Would I be able to make a lump sum payment in early 2025 equivalent to 7% of my 2024 pay, to bring my 2024 AVCs up to 25%? And if so how would I get the tax relief on that, would I need to make a tax return?
Hi Protocol, yes that’s all correct. I can control the level of AVC I make just by notifying payroll. The monthly AVC payment is deducted from my gross pay and therefore I get my tax relief at source.It seems you have a DC occupational scheme.
The normal contributions by you to the DC scheme attract tax relief through payroll.
Any increased contributions to the work pension scheme through payroll would typically get tax relief through the payroll.
If you start a separate AVC scheme, not through payroll, you would make the contributions from your bank account to the AVC firm.
In that case, yes, you claim the tax relief by submitting forms to the Revenue.
This can be done as part of a normal Form 12 tax return, where you might also be claiming tax relief on medical expenses, remote working, etc.
I had one question around AVCs. In my case my percentage limit is 25%. Just say by the end of this current year my AVCs for the year added up to 18% of my gross pay. That would mean that there was 7% of my limit that I didn’t utilise. Would I be able to make a lump sum payment in early 2025 equivalent to 7% of my 2024 pay, to bring my 2024 AVCs up to 25%? And if so how would I get the tax relief on that, would I need to make a tax return?
Apologies for the confusion, that’s actually the terminology being used by our payroll department. They refer to both the voluntary contributions from payroll and once off lump sums as “AVCs”. You could well be right thoughOkay.
There is a question of terminology here.
An AVC typically refers to a wholly separate pension policy started between an employee and a firm like Zurich, etc., as an add-on policy, with a separate fund, separate to the main pension scheme.
For example teachers, nurses, etc. starting an AVC policy with Zurich or New Ireland to enhance their work DB pension.
Personally, I would not call increased employee contributions to your main scheme as an AVC.
Maybe I'm wrong.
Yes, you’re wrong.Okay.
There is a question of terminology here.
An AVC typically refers to a wholly separate pension policy started between an employee and a firm like Zurich, etc., as an add-on policy, with a separate fund, separate to the main pension scheme.
For example teachers, nurses, etc. starting an AVC policy with Zurich or New Ireland to enhance their work DB pension.
Personally, I would not call increased employee contributions to your main scheme as an AVC.
Maybe I'm wrong.
Thanks GG. Yes, that’s what I was getting at with my question. This year for example, I know now that the total of the voluntary contributions I make is going to fall short of my limit of 25% by the time the year is over. But I would be in a position to make up the difference early next year by lodging a lump sum.Yes. And the can make back payments for the prior year and get tax relief via their tax return for that year (rather than through payroll).
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