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Pension contributions as employee - tax saving query

  • 15-08-2021 8:02pm
    #1
    TiGeR KiNgS
    Registered Users, Registered Users 2 Posts: 1,435 ✭✭✭


    Is using a monthly salary sacrifice for pension contributions the most tax efficient method for pension contributions for a PAYE employee ? ... over the annual AVC contribution.

    Does the monthly salary sacrifice add an additional 4% saving from the ' 4% Employee PRSI' ? .. .e.g €400 additional tax saving on a €10,000 total pension contributions under the monthly salary sacrifice. (as opposed to the annual AVC pension contribution)



Comments

  • #2
    ari101
    Registered Users, Registered Users 2 Posts: 2,835 ✭✭✭ari101


    They should work out exactly the same. In both cases PRSI is calculated on Gross pay before pension. Doing them via payroll often is required to get a matching ER contribution, and saves the possible timing difference vs. making a contribution and claiming tax back, but doesn't change the amount of tax that can be saved (20%-40% depending on salary level).



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