Why would you set up a pension plan?
- Tax relief on premiums
- Tax free growth on investment
- Tax free lump sum at retirement
You can get Income Tax relief against earnings from your employment for your contributions for these types of retirement plans:
- Occupational pension schemes ( Group Pensions )
- Personal Retirement Savings Accounts (PRSAs)
- Personal Pensions
- Additional Voluntary Contributions (AVCs)
Limits for tax relief on pension contributions
Tax relief for employee pension contributions is subject to two main limits:
- Age-related earnings percentage limit
- Total earnings limit
Age related earning percentages:
- Under 30: 15%
- 30-39: 20%
- 40-49: 25%
- 50-54: 30%
- 55-59: 35%
- 60 or over: 40%
For example, an employee who is aged 42 and earns €40,000 can get tax relief on annual pension contributions up to €10,000.
Total Earnings Limit
The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year