can someone quantify the tax benefit of avc's ?

[bearishbull]

can someone quantify the tax benefit of avc's ? if you put an extra 100 euro a month into pension and are paying 42% whats the benefit? is it 80%or 42% ??
cheers

 

[BRICKTOP]

If you put in EUR100 and are taxed at the top rate, your net pay is reduced by EUR52 (assuming you haven't hit the PRSI ceiling or EUR56 if you have).

EUR100 is paid to your pension and you have an asset of up to and between EUR95-100 depending on the allocation rate you get from your pension provider.

Please note Revenue limits on AVC e.g. < 30 15%, 30-39 yrs old 20% etc etc.

 

[bearishbull]

so it costs you 58euro to get up to 100euro in pension? so this would be approx 42/58 or around 80%?
cheers

 

[ClubMan]

so it costs you 58euro to get up to 100euro in pension? so this would be approx 42/58 or around 80%?
cheers

Huh!?

Where did €58 come from?

And even if it's irrelevant here 42/58 = 72%.

If you qualify for full tax/PRSI relief on a €100 contribution then the contribution comprises €52 from you, €42 in tax relief and €6 in PRSI relief. The total relief is worth 48% to you. Obviously you earned the €100 as gross pay in the first place but in the absence of pension contribution tax/PRSI relief you would normally only get €52 into your hand. With pension tax/PRSI relief you have recouped the €48 in tax/PRSI that you would otherwise have "lost".