Why would you set up a pension plan?

  1. Tax relief on premiums
  2. Tax free growth on investment
  3. 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

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