Taxation of pensions

Chargeable excess tax

If your pension fund at retirement exceeds the Standard Fund Threshold (SFT), it will be liable to a chargeable excess tax. The SFT is currently €2 million and anything over this amount will be liable to chargeable excess tax at 40%.

There are no reliefs, allowances or deductions allowed to be set against the chargeable excess tax. However, the tax paid at 20% on the amount between €200,001 and €500,000 may be set against the chargeable excess tax.

When chargeable excess tax arises, Form 787S should be completed by the pension administrator and submitted to Revenue. The excess should be paid within three months of the of the end of the month in which the lump sum occurred.

Pension scheme providers and, where applicable, administrators, should deduct the chargeable excess tax and pay it to Revenue. All queries in respect of the excess lump sum and chargeable excess tax should be directed to the:

  • pension's scheme administrators
  • Personal Retirement Savings Accounts (PRSAs) providers
  • Pan-European Personal Pension Products (PEPPs) providers
  • or
  • Retirement Annuity Contracts (RACs) providers.