Employer pension

tharmor

Hi Guys,

Hope someone would be able to help me here.

I am joining a new employer who would be contributing 8% of what my pension contribution would be.

Can anyone advise on tax benefits. Is the pension amount eligible for higher tax bracket and USC and PRSI as well ?

Also if i leave the company after 2 years...do I get all the amount paid or how does it work out ?

Thanks

Peregrinus

tharmor wrote: »

Hi Guys,

Hope someone would be able to help me here.

I am joining a new employer who would be contributing 8% of what my pension contribution would be.

Are you sure that's correct? For every one euro you contribute to the pension scheme, your employer contributes 8 cents? That would be a pretty lousy deal.

tharmor wrote: »

Can anyone advise on tax benefits. Is the pension amount eligible for higher tax bracket and USC and PRSI as well ?

You have no liability to income tax, USX or PRSI on the contribution your employer pays to a pension scheme for your benefit.

tharmor wrote: »

Also if i leave the company after 2 years...do I get all the amount paid or how does it work out ?

If you leave after less than two years, you can get your own contributions back out of the scheme, but not your employer's. In this circumstance you will get no benefit from your employer's contributions.

If you leave after two years or more, you cannot get a refund of your contributions. Both your own contributions and your employer's stay in the scheme and continue to grow until you reach the age at which you can take benefits (a pension, a lump sum) out of the scheme. If you join another pension scheme, you can transfer the value of your contributions and your employer's to that scheme, so that you don't end up at retirement age with a slew of different pension entitlements in different schemes.

This doesn't give you any immediate cash but, in the long run, it's a much better deal than simply taking your own contributions out.

tharmor

Peregrinus wrote:

Are you sure that's correct? For every one euro you contribute to the pension scheme, your employer contributes 8 cents? That would be a pretty lousy deal.

Sorry its 8% of base salary not my contribution !!

tharmor

Peregrinus wrote:

You have no liability to income tax, USX or PRSI on the contribution your employer pays to a pension scheme for your benefit.

What about my componenet...I understand its tax free !!

Peregrinus

tharmor wrote: »

What about my componenet...I understand its tax free !!

Yes, it is.

tharmor

Peregrinus wrote:

Yes, it is.

So if i withdraw before 2 years i would have to pay 20% tax on my contribution and i will lose employer contribution...?

mbradso2003

You get tax relief at your own marginal rate on your own contributions.

If you leave with less than 2 years in pension scheme (this includes any transferred service/value) you receive value of own contributions less 20% tax. Company could give you immediate access to employer contributions but unlikely.

If you leave with more than 2 years in pension scheme, you will receive deferred benefit, payable at Scheme normal retirement date. You can take early retirement from age 50, and a number of options are available at early/normal retirement. Tax free lump sum which can be calculated in 2 ways, 25% of pension fund value or calculation set out by Revenue. Balance can be used to purchase annuity or invested in AMRF/ARF depending on thresholds etc.

Mrs OBumble

tharmor wrote: »

What about my componenet...I understand its tax free !!

But only up to a certain %-age of your salary.

What this is varies with age - see here for details: http://www.citizensinformation.ie/en/money_and_tax/personal_finance/pensions/personal_pensions.html

Note that it's free of income tax, but not PRSI or USC.