Employer contributions and salary changes

[camlin90]

I am a proprietary director who is looking into setting up a company pension plan.

I am paying myself 33,800 pa and based on my age, past service etc I have been informed that I can contribute 14,049 pa to a pension according to Revenue rules.

The documentation also states that a contribution of 17,352 this year and 13,917 pa thereafter would achieve the same fund at retirement.

Could anyone please advise:
- If I increase/decreasd my pay this year does the maximum pension move in line ?
- Will the Revenue accept the higher amount of 17,352 being contributed this year on a one off basis?

Many thanks

 

[Steven Barrett]

If your salary increases, the maximum contributions can increase. You have to submit proof to Revenue through payslips or P60.

The €14,049 is what is called an ordinary contribution, which can be paid each year.

The €17,352 is what is called a special contribution and is in relation to past service. In order to claim tax relief in the year it is paid, it must be matched by a ordinary contribution. In the situation you gave, you can claim tax relief €13,917 as an ordinary contribution and €13,917 as a special contribution. The €3,435 will have to be carried forward to next year.

But what you will do in reality is claim €13,917 as an ordinary contribution and €3,435 as a special contribution and claim the lot in the year it is paid.

I've gone the long, technical route to say, yes, you can pay €17,352 this year.

Steven
www.bluewaterfp.ie