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How much tax can be avoided through pension ?

  • 09-10-2016 1:38pm
    #1
    dor843088
    Registered Users, Registered Users 2 Posts: 1,171 ✭✭✭


    Hi if anyone can answer this for me I would greatly appreciate it. If a 32 year old earns say 50k and chooses either to max out pension contributions (I think its 20% or 10k in this case) or not to max them out what would be the difference in how much tax is paid by him ? Is it 4200 euro ? If anyone knows it would be a great help thanks.


Comments

  • #2
    Lockedout2
    Registered Users, Registered Users 2 Posts: 402 ✭✭Lockedout2


    On the assumption that they pay tax at 40% then it's 40% of €10,000.


  • #3
    dor843088
    Registered Users, Registered Users 2 Posts: 1,171 ✭✭✭dor843088


    Lockedout2 wrote: »
    On the assumption that they pay tax at 40% then it's 40% of €10,000.

    Appreciate that thanks


  • #4
    digzy
    Registered Users, Registered Users 2 Posts: 3,049 ✭✭✭digzy


    just remember you'll pay tax when you draw it down.
    Think you can withdraw 20% as a lump sum tax free but you're liable to pay tax on the rest as with any other income

    paying into a pension that pays you an annual sum that drives you into the higher rate defeats the purpose of it imho.

    Watch out for the management fee and allocation rate too. You'll loose out on a fair chunk of your money if you get this wrong.


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