Aib Pension adjustment

Trhiggy83

Hi there,
I have a Pension set up with AIB and recently cut what i was paying in from 480 to 300 per month. The bank posted me out a PRSA a half yearly statement after i done this. Do i have to forward this to the revenue department so my tax credits can be adjusted does anyone know as they have not said anything to me but i am guessing i need to tell revenue.

Trhiggy83

eagle_i wrote: »

Jelly2, you get full tax relief on your pension contributions up to the maximum contribution rates set out in the age scale below. Where you are contributing to a personal pension you claim the tax relief at the end of year in which you paid. This is normally done when you make your self assessment tax return prior to 31st October, so lets say you made pension contributions last year (01/01/2009 to 31/12/2009), you need to make your tax return by 31/10/2010 for last year.

You are entitle to full PAYE and PRSI relief. You will need to do it in two steps:
1. Forward the RAC certifciate/PRSA1 form (issued by your pension savings provider) to your inspector of taxes they will refund you the relief based upon your relevant PAYE tax rate (20% or 41%).

2. Forward a copy of the RAC Certificate/PRSA1 form to the PRSI area of the revenue to receive the PRSI relief, which can be an additional 6% approx.

The maximum contributions as a % of earnings are as follows:
Age Under 30: 15%
Age 30 to 39: 20%
Age 40 to 49: 25%
Age 50 to 54: 30%
Age 55 to 59: 35%
Age 60 and over: 40%

I just saw this on another forum, Does anyone know why you have to send the RAC certifciate/PRSA1 form to your local tax inspector and the revenue office to recieve tax relief. I was always under the impression that the tax relief was already taken off at source and that i was already recieving tax relief every month. When you fill out the self assessment - what is the purpose of doing this does anyone know?

eagle_i

Perhaps I should have explained tax relief is given/received in a couple of ways depending on your contract type:

1. You have a personal pension, as such one of the old type contracts prior to the introduction of PRSA’s, these are still available but fall under different rules to a PRSA contract. Anyway, lets say the contract you have is a Personal Pension Plan(PPP), therefore you are making contributions each month personally (no employer contributions are allowed into a PPP), this is paid over the course of the year, so at the end of the tax year you make your self assessment tax return by the following 31st October to receive the tax relief on your pension contributions for the previous tax year. (eg. You paid a total of €xxx into your PPP during the tax year 01/01/09 to 31/12/09. For the tax year ending 31/12/09 you must make a self assessment tax return to your inspector of taxes by 31/10/10. For the contributions you pay to the end of the 2010 tax year (31/12/10) you claim the tax relief for those contributions when you make your tax return prior to 31/10/11). Relief is claimed by submitting the RAC Certificate which is issued by the PPP provider as proof of payment.

2. If you have PRSA contract (with/without employer contributions) which is NOT processed through your employer’s payroll system, in other words you are making the contributions personally through your own bank account. In this instance you fall into the same category as the PPP above and must claim the relief from your inspector of taxes in the same way as described in 1 above. You claim the relief by submission of the PRSA1 Form which again is issued by the PRSA provider as proof of payment. Also if you make additional voluntary contributions to a PRSA AVC contract outside of the employer payroll system, in this instance a PRSA2 Form is issued by the provider.

3. If you have a PRSA contract (with/without employer contributions) which IS processed through your employer’s payroll system you receive the full tax relief at source. In this instance your employer pays the PRSA provider each month on your behalf. Therefore you do not make a subsequent tax relief claim as your contributions are deducted from your salary each week/month before it is assessed for income tax. Obviously, this is the simplest method of receiving tax relief on your contributions to a PRSA. The same applies to additional voluntary contributions to a PRSA AVC, which is processed through the employer’s payroll system.

4. If you are a member of an employers group pensions scheme/executive pension plan your contributions are deducted from your salary before it is assessed for income tax. Therefore the tax relief is received at source, similar to 3 above.

I think I covered all scenarios above, it really depends on the type of contract into which you are contributing. With regard to your change in contribution to your PRSA with AIB, if this is done through your employer as described in 3 above, then you do not have to do anything, the adjustment is accounted for automatically by your employer. If this is not the case, you will receive the PRSA1 Form from AIB at the end of each tax year (as you should had received in previous years), in this instance you must claim the relief as described in 1 and 2 above.

Hope this answers your query and does not confuse you totally. If in doubt ask AIB! A really good website to refer to is the Pensions Board (www.pensionsboard.ie), it is great as it breaks down the financial jargon words and has a Q&A section which covers a lot of the above and more. Another good site is www.itsyourmoney.ie, this was initially set up by the financial regulator and is now associated with the consumer agency (I’ll restrain from venting my personal opinions on those later two state agencies, but I can’t argue with the websites they are good, simple and informative).

Trhiggy83

Thats great detail eagle i, i have a prsa type pension and i have recieved the prsi1 form from aib. I was never told when i was setting up my pension that i had to fill out a self assessment form, i did recieve one in the post alright but was not too sure whether i needed to fill it in. So i would not have recieved any tax relief so yet if i have not submitted this self assessment - is this correct. How do they pay the tax relief to you after you sent in the self assessment ??

eagle_i

The annual self assessment tax return is where you claim your tax refund on qualifying medical expenses incurred during the previous tax year, you also declare any dividend income from shares, rental income, capital gains from the sale of shares/property (if only!!!!) etc...

Assuming you don’t owe the tax man any additional taxes other than what you paid through your salary during the year, then you will receive a cheque from the good old revenue (while it will be tempting to frame the cheque, as it may become rare commodity in the near future, you’re better off cashing it asap!) refunding the tax relief on your pension contributions and any other rebates due to you for things such as medical expenses, covenants etc..

You could try www.taxback.ie, I’ve never used them so can’t comment any further. Perhaps they may be able to give you guidance in this area of claiming other allowances which you may not be aware of, not sure what their fees are or if they are any good. Also go on to the revenue’s own website, www.ros.ie, again this is a very good site and can guide you through making your tax return, which can be completely done online.

With regard to your PRSA contract, you may not realise but your employer has legal obligation toward it’s employees regarding PRSAs. The following is just a brief explanation of the employer obligations, this information is freely available on the Pensions Board website:

PRSA’s and Employer Obligations:
Under current pension legislation if an employer does not operate a Group Occupational Pension Scheme or if membership restrictions apply to that scheme, the employer must provide access to at least one Standard PRSA provider for all excluded employees. An excluded employee is:
• Where the employer does not have an Occupational Pension Scheme in place.
• Where the employee is not eligible to join the company’s Occupation Pension Scheme and will not become eligible within 6 months of joining the company.

To comply with pension legislation the employer must:

• Nominate at least one PRSA provider, by completion of an appointment form. The nomination of a PRSA provider does not incur a charge.
• Allow contributions to be deducted through the company payroll system and advise employees each month of the total contributions paid (including employer contributions, if any), this is normally set out on the employee’s payslip each month.
• Contributions must be paid within 21 days of the month end in which contributions are deducted from the employee’s salary.
• Advise the employee they have a right to contribute to a PRSA contract through the nominated provider within six months of joining the company (Employees can opt to contribute to a PRSA contract with another provider, however, the employer is not obliged to facilitate contribution deductions through the payroll for another PRSA provider).
• Account for all contributions in P35 returns.

Failure to comply with the legislation will result in on the spot fines, the Pensions Board can request an audit of the employer’s pension records to ensure they are complying with their obligations.

Follow the link below, which will bring you to a series of books regarding all aspects pensions, there is a lot in them but you will find answers to all your pension questions here.
http://www.pensionsboard.ie/en/Publications/Information_Booklets/

Trhiggy83

I was under the impression that I was getting tax relief on my wages directly but in fact i was not if what you are saying is true. In the last two years I have paid approx 10k into my pension. Not too sure how much was at a higher rate and lower rate but should still be a nice amount.