Quick Pension Question

Brian201888

Somehow have managed to confuse myself googling this. I'm 32 so qualify for tax relief up to 20% of my salary to pension contributions.

Currently I pay 4%, company pays 12% giving me 16% overall. If I want to maximise my contribution to the limit of the tax relief can I do an additional 16% giving me 20% company 12% or is it 20% overall and I can only put in 8%?

jimmy456

Depends on the pension policy.

If the policy is a PRSA then you can only put in an additional 4%. If the policy is an occupational scheme you can put in the 16% subject to the funding levels of the scheme.

Employer contributions to a PRSA will use up your threshold.

lawred2

12% is seriously generous. Well done for getting that

Brian201888

jimmy456 wrote: »

Depends on the pension policy.

If the policy is a PRSA then you can only put in an additional 4%. If the policy is an occupational scheme you can put in the 16% subject to the funding levels of the scheme.

Employer contributions to a PRSA will use up your threshold.

Believe it's an occupational pension looking at the definitions online, that's excellent news. Will clarify with work tomorrow thanks for that

donkey balls

lawred2 wrote: »

12% is seriously generous. Well done for getting that

I roughly get the same as the OP along with a paid long term sick scheme and death in service benefit for my beneficiaries, I have a DC scheme how does that fare up among other DC schemes ? The older lads are on a DB scheme and call our DC the yellow pack plan:p

The J Stands for Jay

lawred2 wrote: »

12% is seriously generous. Well done for getting that

It's pretty sad that this is seen as generous.

donkey balls

McGaggs wrote: »

It's pretty sad that this is seen as generous.

What would be the norm ?

lawred2

McGaggs wrote: »

It's pretty sad that this is seen as generous.

You won't find me disagreeing. But that is without doubt generous for employers in Ireland

cefh17

donkey balls wrote: »

What would be the norm ?

I get a 2:1 match for my contributions up to 8% max from my employer. 1:1 seems to be the norm among friends

bilbot79

The 20% is for your own contributions not your employers.

Presuming you're not underpaid in the market, your employer is a pensions dreamboat. Max it out, I wish I had.

donkey balls

Regarding employers contributions how do they fare against the likes of the UK & Euroland, Our scheme is a mandatory 5% of salary with the company putting in 10% be great if they matched the AVC though

bilbot79

cefh17 wrote: »

I get a 2:1 match for my contributions up to 8% max from my employer. 1:1 seems to be the norm among friends

I got that from my former underpaying employer. My current employer doesn't match but the salary is so good
now my pension situation is fairly similar anyway

myshirt

Couple of posts in and all wildly incorrect advice.

The 20% is everything. You and your employer. So if they are putting in 12, you can put in 8. End of.

bilbot79

myshirt wrote: »

Couple of posts in and all wildly incorrect advice.

The 20% is everything. You and your employer. So if they are putting in 12, you can put in 8. End of.

I stand corrected

Henry Ford III

myshirt wrote:

The 20% is everything. You and your employer. So if they are putting in 12, you can put in 8. End of.

No. 20% is the max. personal contribution for income tax relief. Overall maximum funding (Revenue approved) will be much much higher.

bilbot79

Henry Ford III wrote: »

No. 20% is the max. personal contribution for income tax relief. Overall maximum funding (Revenue approved) will be much much higher.

I think myshirt has this one im afraid

'employers prsa contributions are deemed to be made by the employee for tax relief purposes'

https://www.revenue.ie/en/jobs-and-pensions/pensions/tax-relief-for-pension-contributions.aspx

ANXIOUS

bilbot79 wrote: »

I think myshirt has this one im afraid

'employers prsa contributions are deemed to be made by the employee for tax relief purposes'

https://www.revenue.ie/en/jobs-and-pensions/pensions/tax-relief-for-pension-contributions.aspx

The OP said he thinks it's an occupational pension scheme.

The J Stands for Jay

lawred2 wrote: »

You won't find me disagreeing. But that is without doubt generous for employers in Ireland

I agree that it is generous in comparison to what you can get out there. I believe the average is 7%, with a lot of employers seeing 5% as an appropriate amount. It just pales in comparison to the DB contributions that were common in the past (and don't even mention the rate that civil service schemes are equivalent to).

I get 12% plus 4% matching which is good, but still less than would be contributed to keeping a DB scheme going.

Squall Leonhart

We're matched up to 4% where I work at present.
Previous company gave 0%

12% seems lavish to me!

At present, I give 8%, employer gives 4%. It's a PRSA.

jimmy456

Squall Leonhart wrote: »

We're matched up to 4% where I work at present.
Previous company gave 0%

12% seems lavish to me!

At present, I give 8%, employer gives 4%. It's a PRSA.

How about looking at it this way? Pension contributions are just another form of payment from your employer along with salary, health insurance, car and so on. From a company point of view all these just add up to a total cost for your employment.

So when you say lavish would you also consider a 12% pay rise lavish?

Also you have to consider what type of pension can be bought at that funding rate. In most cases there is certainly nothing lavish about the pension that would be bought with a 12% contribution rate. This is particularly true as most people don't think about pensions till its too late.

One of the main issues with the move from Defined Benefit to Defined Contributions schemes is that employers are off the hook for the pension at retirement. It pushes all the responsibility to the employee. Employees generally don't engage with pensions at all and as a result have a huge gap in their retirement provision. It was a lot easier for employees when DB were commonplace.