Anyone who makes pensions contributions to certain pension products is given tax relief on those contributions (including AVC’s – additional voluntary contributions). Both employees and self employed individuals are granted relief at their higher rate of tax, subject to limits discussed below. This means that if you decide to contribute €500 into your pension, €500 ends up in your pension pot. Otherwise you would end up getting €400 or €300 into your hand as the rest would be taxed at either 20% or 40% depending on your earnings.
Allowable pension products
- Occupational and statutory pension schemes
- Retirement Annuity Contracts (RAC’s)
- PRSA’s
- Qualifying overseas pension plans
Limits on pension contributions
Tax relief is subject to two main limits:
1. Age-related earnings percentage limit
You can get tax relief up to the relevant age-related percentage limit of your earnings in any year.
| Age | Percentage limit |
|---|---|
| Under 30 | 15% |
| 30-39 | 20% |
| 40-49 | 25% |
| 50-54 | 30% |
| 55-59 | 35% |
| 60 or over | 40% |
This means that some aged 30-39 who earns €40,000 per year can get tax relief on a maximum of €8,000 pension contributions annually.
2. Total earnings limit
The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.
Employer PRSA contributions
Employer PRSA contributions are:
- treated as made by the employee for tax relief purposes
- included in the employee’s actual contributions to determine if the limits discussed above have been reached
- treated as a taxable employer benefit received by the employee
You may pay a once-off 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.
How to claim the relief as an employee
Your employer will usually deduct the contributions directly from your pay and will give you the tax relief due. However if you have set up a private pension where your employer does not deduct the contributions, you can claim the relief yourself through your Revenue MyAccount. You will need to complete an income tax return but it is very simple and a step-by-step process when done through MyAccount.
How to claim the relief when self employed
Self employed individuals should claim tax relief on pension contributions through their annual tax return (Form 11) on ROS.
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