Employer Pension Contributions & Tax

D

dustie

Registered User
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Hi all,
I am working for a company setting up an office in Ireland. I am first employee and I was told I would have a pension benefit in my letter of offer and contract.. no % specified as I was first employee and nothing setup. It now seems like employer doesn't want to contribute and instead add to gross salary.
Am I correct in thinking that this is not cost effective for either me or the employer? Anything added to my gross salary will be taxed at 40%. Finding it hard to work out employers online but I think employer contributions to a pension fund are offset against tax. Therefore paying the extra 5% into a pension would be cheaper than the additional PAYE costs of paying it in salary?
Can anyone shed any light as I need to have better info before I revisit this topic?

Thanks!
 
If your employer pays as salary, they have to pay PRSI on the additional amount.

If you redirect this additional income into your pension, you have to pay PRSI and USC on the contribution, something you are not charged if it is paid directly by the company.

It's cheaper for both of you for them to pay into a pension plan for you.

Are they setting up an Irish bank account, registering with the Revenue etc? If so, it won't be a problem setting up a pension. If paying you from the UK, not all insurance companies will accept payments from outside Ireland.


Steven
www.bluewaterfp.ie
 
SBarrett said:
If you redirect this additional income into your pension, you have to pay PRSI and USC on the contribution, something you are not charged if it is paid directly by the company.

It's cheaper for both of you for them to pay into a pension plan for you.
Click to expand...

Is this the case for AVCs Stephen. I have the option of making avcs direct from salary deduction but I don't want the scheme that's offered. I use a different prsa and transfer direct from after tax income. Have I been paying prsi and USC where I could have avoided? (I'm in the public sector)
 
Hi Itchy

The situation with the OP is different. His employer are looking to pay him the employer pension contribution as salary. If he pays that as a personal contribution himself, he will have to pay PRSI and USC.

You are not unnecessarily paying USC and PRSI. Your AVC's and even the normal contributions are liable to USC and PRSI.

Steven
www.bluewaterfp.ie
 
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