If you have a new account but are having problems posting or verifying your account, please email us on for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact

First Time Pension Stupid question

  • 01-07-2013 11:35am
    Closed Accounts Posts: 1,658 ✭✭✭

    My job is offering a pension - they match our contributions up to 10pc. Seems ok.

    I'm being a right idiot here but in relation to taxt relief: say I pay €175pm PAYE at the standard rate at the moment and not earning enough to pay at higher rate thankfully. If I contribute €175 to pension does that mean I pay zero tax?


  • Closed Accounts Posts: 1,207 ✭✭✭Pablo Sanchez

    Matching up to 10% is indeed a good deal!

    Your pension contribution will be taken from your months gross pay (ie before tax). This then means that while you are paying €175 into your pension yourself, you are in fact only losing the use of €140 as you would have paid €35 tax on the full €175 if you did not contribute.

    A higher rate tax payer would benefit more than double that, the 175 contribution would only cost them the use of approx 103 in real terms.

    Sorry if its written in a confusing way!

  • Registered Users Posts: 71 ✭✭HowFinancial

    1. Employer Contributions: €175 (you pay 0 tax)
    2. Your Contributions: €175 Gross (less tax relief @ 20%) = €140 Net

    10% matching employer contributions is a super offering and you should take it if at all possible.

    "If I contribute €175 to pension does that mean I pay zero tax?"
    It means that you pay no PAYE on this portion (€175) of your income. However Universal Social Charge (up to a maximum of 7% in your case) will apply.

    I cannot stress how good this offering is. Effectively you contribute 10% in order to get the employer 10% as well. In addition you get tax relief on your contributions.

  • Closed Accounts Posts: 1,658 ✭✭✭donutheadhomer

    thanks for the help guys. I signed up anyway.