Hi,
Regarding relief for maximum contributions I always thought it was calculated against gross salary... for example:
-You have a relief of 15%
-Your employer contributes 5%
-Therefore you can contribute another 10%
However there's a link on mercer which explains relief is calculated against salary plus employer pension contribution... if you adjust for such in the above example:
-You have a relief of 15%
-Your employer contributes 5%
-Therefore you can contribute another 10.75% ((15% of 105% of salary) - employer contribution of 5%)
http://www.oneview.mercer.ie/plan-your-pension/retiring-soon/maximising-pension-contributions.html
Can anyone knowledgeable in pensions tell me whether this is correct or not?
Regarding relief for maximum contributions I always thought it was calculated against gross salary... for example:
-You have a relief of 15%
-Your employer contributes 5%
-Therefore you can contribute another 10%
However there's a link on mercer which explains relief is calculated against salary plus employer pension contribution... if you adjust for such in the above example:
-You have a relief of 15%
-Your employer contributes 5%
-Therefore you can contribute another 10.75% ((15% of 105% of salary) - employer contribution of 5%)
http://www.oneview.mercer.ie/plan-your-pension/retiring-soon/maximising-pension-contributions.html
Take Jim in the example above, who is 42. Suppose that both Jim and his employer are contributing to Jim’s PRSA. If Jim’s employer is contributing a figure equal to 10% of Jim’s salary to the PRSA, then Jim’s own personal contributions are limited to 17.5% of salary. This is because the maximum percentage of net relevant earnings that can be contributed at his age is 25% inclusive of the employer contribution but the 10% employer contribution can also be included in the net relevant earnings calculation i.e. Jim can contribute 25% of (salary plus employer pension contribution) less employer pension contribution.
Can anyone knowledgeable in pensions tell me whether this is correct or not?