Pensions and tax

Tax relief for pension contributions

You can get Income Tax (IT) relief against earnings from your employment for your contributions (including Additional Voluntary Contributions (AVCs)) to these types of pension plans:

  • occupational pension schemes
  • Personal Retirement Savings Accounts (PRSAs)
  • Retirement Annuity Contracts (RACs)
  • certain overseas plans.

This is subject to the limits below. Income Tax relief is given at your ‘marginal’ (highest) Income Tax rate.

There is no relief from Universal Social Charge (USC) or Pay Related Social Insurance (PRSI) for employee pension contributions.

Limits for tax relief on pension contributions

Tax relief for employee pension contributions is subject to two main limits:

  • an age-related earnings percentage limit
  • a total earnings limit.

The age-related earnings percentage limits

You can get tax relief on your pension contributions up to the relevant age-related percentage limit of your earnings in any year. This relief is only from the employment in respect of which the contributions are made.

 The age-related earnings percentage limits are:

  • under 30: 15%
  • 30-39: 20%
  • 40-49: 25%
  • 50-54: 30%
  • 55-59: 35%
  • 60 or over: 40%.

For example, an employee who is aged 42 and earns €40,000 can get tax relief on annual pension contributions up to €10,000.

Total earnings limit

The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.

PRSAs

  • Employer PRSA contributions are:
    • deemed for tax relief purposes to be made by the employee
    • added to the employee's actual contributions to determine if the above limits are reached
    • treated as a taxable employer benefit received by the employee.
  • Tax relief for PRSA AVCs is based on the appropriate age-related percentage limit of the income from the employment in question, as reduced by any employee contributions to the pension scheme relating to the employment.

You may pay a once-off or special pension contribution after the end of a tax year but before the following 31 October. If you do, you can choose, on or before 31 October, to have the tax relief for the contributions allowed in the earlier tax year. When you use the Revenue Online Service (ROS), the deadlines for paying contributions and making this choice are extended.

Overseas pensions plans: 'migrant member relief'

If you are coming (or returning) to Ireland, you can get tax relief for pension contributions made to pre-existing plans with a pension provider in another EU Member State. Where the relief applies, the contributions to the overseas plan are treated as if they were made to an occupational pension scheme, PRSA or RAC, as appropriate.

Next: Taxation of social welfare pensions