Bonus & Pensions

Dumb Juan

Hi,
A quick question. If I was asked my employer to make a payment directly to a pension provider rather than as a bonus through payroll will be I be liable to USC, PRSI on the payment to a pension provider?

Thanks.

gerrybbadd

You're not explaining the situation very well.

Do you mean that you are due a bonus, and rather than getting a physical cash payment, the employer has suggested paying the bonus money into a pension plan instead?

Dumb Juan

Yes Sorry for the confusion. I have two choices get the bonus paid through the payroll & be taxed as normal or instead of the bonus being paid through payroll, he writes a cheque made payable to my pension provider.
If he pays the pension provider (we do not operate a company pension scheme) will be I be liable to USC, PRSI on the payment to a pension provider?

spuddy

Dumb Juan wrote: »

Yes Sorry for the confusion. I have two choices get the bonus paid through the payroll & be taxed as normal or instead of the bonus being paid through payroll, he writes a cheque made payable to my pension provider.
If he pays the pension provider (we do not operate a company pension scheme) will be I be liable to USC, PRSI on the payment to a pension provider?

The bonus would be then classed as an AVC (Annual Voluntary Contribution). Typically you're not liable for PAYE on the amount in such circumstances, but are to PRSI & USC.

Geuze

If you don't have a main work pension, you can't have an AVC.

So it would be a contribution to an RAC / PRSA / personal pension.