Tax paid on a pension allowance

A bit of background, I am employed by a UK company, working from Ireland and paid through the Irish tax system. I am their only Irish employee and the payroll is outsourced to an Irish payroll company.
As part of my contract I was entitled to 3% pension allowance paid into a pension fund. I do not have a pension fund yet and realise I do need to set one up. But my employers have been paying my pension as an allowance within my salary. This means it is being taxed at 40% and there are also the PRSI and USC deductions coming off the allowance. After all the deductions I am only receiving just over half of the allowance. Is there any pay I can get this tax back through the Revenue? What should I do?

Once you have set up a retirement savings arrangement — and you should lose no time in doing this — you can make a contribution to it yourself, representing the accumulated value of the 3% pension contributions that your employer hasn't been making on your behalf, and has been paying to you instead. You'll get a tax deduction for that contribution. But there is no way to recover the PRSI and USC that has been paid — sorry, that's gone for good. That's why you should lose no more time in setting up a retirement savings arrangement of some kind (probably a PRSA) and giving your employer the details so that the 3% can go straight in, avoiding not only income tax but also PRSI and USC.

(3% of salary is not a massive amount to be squirreling away for retirement. Obviously, I know nothing about your wider circumstances and situation, but you probably should have a bit of a think about your financial big picture and, in that context, consider whether you want to put a bit more than 3% in. But, if not, this is going to be a very small PRSA and, in that context, when choosing your PRSA and you provider, you will want to keep a more than ordinarily sharp eyes on the costs and charges that will be levied.)