Taxation and Pensions

1. Tax Relief and Pensions Contributions

Personal tax relief may be allowed on aggregate annual contributions, including purchase of notional service and AVCs (Additional Voluntary Contributions) subject to the following limits and age at any time during the year of assessment:

Age              Amount which qualifies for tax relief
Under 30 15% of net relevant remuneration
30 to 39 years 20%
40 to 49 years 25%
50 to 54 years 30%
55 to 59 years 35% 
60 years and over 40%

 There is a limit on earnings which may be takein into account for tax relief. This limit is €115,000.

Under the scheme for purchase of notional service operating in the Institute, a person may (subject to certain limits) opt to purchase additional years of service.

For those staff already purchasing service by periodic deduction from salary who may wish to increase their contributions, a further option may be made which would take effect from his/her next birthday.

For further information please contact the staff in Pensions Section of the Human Resources Department

2. Limit on overall fund value - Standard Fund Threshold

The Finance Act 2006 introduced a limit on the value of and individual's pension fund which mya attract tax relief and this may vary from year to year. This is called the Standard Fund Threshold (SFT). With effect from 1st January 2014 the absolute value of the SFT reduced to €2million.  If the fund is greater than the limit then tax at the higher rate (40% in 2015) will be charged on the excess when it is drawn from the fund. The value of defined benefit funds differ depending on the age which the pension is drawn down. For further information on the SFT please see Revenue's Website

3. Taxation on Lump Sum

Since 1st January 2011 there is a limit of €200,000 on the amount of the tax free retirement lump sum. Lump sum payments above that limit will be taxed as follows:

Lump Sum Amount Income Tax Rate
up to €200,000 0%
€200,000 - €500,000 20%
over €500,000 Tax payer's marginal rate

4. Taxation on DIT Pension

Normal PAYE provisions apply to DIT Pensions in payment. For further information on PAYE please visit Revenue's Website.

 

 

 

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