Does BIK Increase the maximum amount of Pension/AVC contributions

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fayf

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I have researched this, but can't seem to find a definitive answer.
I am well aware of the age related limits for Pension/AVC contributions, but the question here is, does a BIK increase the amount that you can put in.

I know a guy who processes Payroll, and they say it does increase the amount available for
Pension contributions, but on the Deloitte Nett Pay calculator website, it does not allow it.
http://services.deloitte.ie/tc/

And on the Revenue website, it says BIK is "Pay", so I assume it follows the normal rules of PAYE.

An example may help:

Age 47: Age Related Limit = 25%

Example:
Gross Salary = 50,000
BIK Health Insurance = 0
Total Taxable Pay = 50,000
Max Pension relief available is € 12,500

Example:
Gross Salary = 50,000
BIK Health Insurance = 4,000
Total Taxable Pay = 54,000
Max Pension relief available is € 13,500
 
In simple terms, any income that is included in your PAYE is potentially pensionable. So your second set of numbers are correct.
For example any BIK, such as BIK on Compsny car, bonuses, preferential loans etc, once taxable as PAYE, can be pensionable. The main scheme may well not include such payments as “pensionable salary” but you can use the additional income for calculating your contribution ( and for benefit limit rules on retirement).
 
Thanks for clarifying, strange then, that he Deloitte net pay calculator, is incorrectly setup, as according to that calculator, a BIK, does mean an increased amount of Employee AVC\Pension contributions,and I am referring to employer contributions only here.
 
Conan said:
The main scheme may well not include such payments as “pensionable salary”
Click to expand...
This is the bit that always confused me. I could only get my employer to deduct up to limit on pensionable salary, which excluded a generous car allowance, and then I'd have to make an AVC after year end for the balance.
 
You could make regular AVC’s each month if you wish, you would have to estimate the total of your BIK’s and non salary payments for the calendar year, and work out the monthly AVC’s amount on that, but, increasing or reducing the monthly AVC amount if circumstances changed, eg a large increase or decrease in your car BIK, or Car Allowance, which can happen, when someone changes roles, with less or more business car travel, or gets a promotion to a higher value company car, or, a bigger car allowance etc.
 
Ah yes, but I work for a large, beauracratic organisation, who outsourced their pension. All very slick and user friendly, but getting them to do a salary deduction for me above the limit would take so long it's just not worth it! I'd still have to make the additional AVC manually, so just keep it simple by once a year.
 
/i never knew about this.
If you are already paying the max AVCs, but if your payslip showed that that BIK as €4000 / 12 monthly, would you just pay 25% of that €4000 / 12 and its done automatically?

Does the BIK appear on your P60? Or would you have to contact your payroll department to ensure they are giving you the tax benefit here?
 
How do Revenue regulate payments in excess of allowance for edges cases like these?

I have some similar concerns in relation to my wife who is currently on maternity leave, her employer is topping-up the maternity benefit so she receives full pay, and the pension contributions (both ee and er) have remained as was (fixed percentage of original salary) - meaning someone has assumed maternity benefit + top up pay=pensionable salary. Trying to figure out where this might balance out.
 
PaxmanK
You really need to agree such an arrangement with Payroll. They may be willing to deduct AVCs based on your BIK in which case you will get full relief over the year through the net pay system.
Alternatively you could establish a Stand -Alone AVC PRSA and pay 25% of the BIK into that. But then you you have to reclaim the tax relief by submitting a tax return at the year end.

Consult payroll and see what they will do for you.
 
Payroll in my company are like ryanair customer care. Not a chance of getting through to them :)
 
many larger companies now have “ticket/case” systems, and once you raise one for your query, you should get a response, if you do not, escalate it to the Finance or Payroll Manager, and you will notice an increase in the speed of response, that’s my experience anyway.

Smaller organizations usually have a point of contact, including if payroll is outsourced.

For changes to AVC amounts/percentages, it is sometimes the pensions company who are the correct people to contact, as the changes are usually fed onwards to payroll.

In any event, a payroll request deserves a reply, so I find following them up promptly, usually gets results.
 
So I got a reply from my HR department after a long time. They said that this cannot be done.
I have a salary, but I also have health insurance and accommodation allowance that together add about €8000 to my salary.

I want to pay an extra €2000 into my pension.

I am already paying the max (25%) amount of my salary for my age into pension but would like to pay more, but payroll wont organize the tax deduction if i pay €2000 into the pension so i am losing the 40% tax benefit of it.

What can I do here to convince them to deduct this amount for me properly?
And if by some miracle they did see sense, how far can this be backdated?
 
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