How to direct bonus into pension via employer contribution

S

short_boy

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I've read variations on this theme on AAM but haven't found the answer I'm looking for.

If somone has maxed their pension contribution to revenue tax limits how can they plan tax efficiently for discretionary bonus payments? More bluntly, how can the employer direct some/all of the bonus into the employer pension contribution? I'm aware of businesses that do this, just unaware of what's required to keep Revenue happy about it.

Is it better/easier via PRSA or occupational scheme?
Who would have experience in this pension-tax area if not on AAM?
 
Unfortunately not. There's lots of debate and some examples of some people that had such an arrangement but no details or how to put it in place so salary sacrifice isn't a problem....u less I've missed something
 
I think it’s fair to say none of the previous conversations include something like a “how to” guide as every situation is different. it is also not clear what Revenue would accept as legit in an intervention, as nobody has reported what they’ve looked for in one yet. even if they’ve done it, Revenue could look for something they don’t have in 3 years time.

That said, the rules are clear that it can’t be salary sacrifice and it can’t be more than 100% of regular PAYE from that employment that year, so as part of the process, your employer should create some documents to you stating they’re giving you a discretionary bonus of a pension contribution. You also need to check that you don’t have anything in your contract that would suggest you’re entitled to a bonus as part of salary.

Will it be enough? Who knows, as nobody knows what revenue will do if they intervene. This could all look extremely artificial if you got a bonus of a pension contribution and everyone else got the same bonus as salary! Would revenue care? Nobody knows.

Context like above could be very important, and it's impossible to make something cast iron, even with professional guidance. If your employer isn't interested in leaning in to 'make this happen', there's not really anything you can put in front of them that says it can be done with no risk.

This is particularly true in your case, as they're offered you a bonus and you're trying to 'redirect' it to a pension as employer contribution. This is almost the definition of salary sacrifice, so convincing an employer that's not keen anyway that it's above board could be tricky.
 
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