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How much can your employer contribute to your contributory pension scheme?

  • 03-03-2016 7:09pm
    #1
    yqtwqxqm
    Registered Users, Registered Users 2 Posts: 422 ✭✭


    Does anyone know How much can your employer contribute to your contributory pension scheme and still get tax relief on their contributions.

    Im almost 50.
    I was going to retire this year, but my employer wants me to stay.
    They have offered me a few choices, but im only thinking of putting off the retirement for 1 or 2 years.

    One option that they mentioned is that they can pay me another 20% of my salary straight into my pension fund. That way i wont pay tax on it.

    At the moment they pay in 10% and I pay in the max % im allowed to get full tax relief on myself.

    My question is, if I ask them to pay another 20% into my pension scheme on top of the 10% they already pay into it, then do they still get tax relief on the now 30% they are contributing to my pension fund?

    The answer will effect my negotiations with them.
    I know its another question for an advisor, but im not seeing him for a couple of weeks and im in the middle of negotiations now already.


Comments

  • #2
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,858 Mod ✭✭✭✭Henry Ford III


    Maximum funding limits are very high - likely to be in excess of 100% of salary.

    So the e'er will get a tax break on any increased contribution. They'll also save employers PRSI.

    Having extra paid into your pension is great but check carefully how benefits can be taken.

    Get proper advice.


  • #3
    glued
    Closed Accounts Posts: 2,446 ✭✭✭glued


    Get some tax advice as there are so many variables that grow depending on your individual circumstances. Ultimately you need to look at this from an employer and a personal tax point of view as your employer's pension contribution can cause you to pay more income tax. Half an hour with a tax advisor will cost €70-100.


  • #4
    The J Stands for Jay
    Registered Users, Registered Users 2 Posts: 5,876 ✭✭✭The J Stands for Jay


    As long as it's being paid into an approved pension scheme (rather than a PRSA or personal pension), the employer's contribution won't affect your tax relief or your take home pay.

    The pension provider or the scheme trustees can produce a Max funding quote to show how much can be paid on without exceeding the maximum fund. If the proposed contribution plus your contribution is less than the maximum shown on the quote, there won't be an issue.


  • #5
    yqtwqxqm
    Registered Users, Registered Users 2 Posts: 422 ✭✭yqtwqxqm


    Thanks for the info.
    I have an appointment with a FA, but I wont see him before negotiations happen.
    So I might just lay out what im looking for and then talk to the FA to confirm.


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