Public service pension and private pension

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FintanJ

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A friend currently has a private pension that he contributes to. He is considering taking new role with public sector and will be member of current public sector pension scheme.

Can he continue to contribute to private pension? Staying within tax relief limits. I read somewhere that you can contribute to two pensions but not clear to me.
 
I'll assume that his public sector job will be his sole source of income. If so, while in theory he can continue to pay contributions to his private pension, he will no longer be eligible to claim tax relief on them so that makes it inadvisable. Instead he should replace the contributions to the current private pension with contributions to an AVC PRSA on which he can claim tax relief.
 
LDFerguson said:
I'll assume that his public sector job will be his sole source of income. If so, while in theory he can continue to pay contributions to his private pension, he will no longer be eligible to claim tax relief on them so that makes it inadvisable. Instead he should replace the contributions to the current private pension with contributions to an AVC PRSA on which he can claim tax relief.
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Thanks Liam . Do you know what is the logic of restriction?
 
FintanJ said:
Thanks Liam . Do you know what is the logic of restriction?
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An AVC PRSA must be set up to run in parallel with the main scheme benefits. In a sense it's just an addition to the main scheme benefits. The benefits must be taken at the same time as the main scheme and must take the main scheme benefits into consideration. When applying for an AVC PRSA the provider looks for details of the main scheme to make sure that the benefits from the main scheme plus the AVC PRSA don't exceed any limits etc. So I think Revenue just want the link between the main scheme and the AVC PRSA.
 
LDFerguson said:
An AVC PRSA must be set up to run in parallel with the main scheme benefits. In a sense it's just an addition to the main scheme benefits. The benefits must be taken at the same time as the main scheme and must take the main scheme benefits into consideration. When applying for an AVC PRSA the provider looks for details of the main scheme to make sure that the benefits from the main scheme plus the AVC PRSA don't exceed any limits etc. So I think Revenue just want the link between the main scheme and the AVC PRSA.
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Does this mean that when calculating the amount to put into an avc prsa, the amount already contributed to the public sector spsps through payroll deduction must be deducted in order to arrive at the max available for tax relief?
 
Further to this, I note that my spouse's 2022 Revenue figure of 'Pay for Income tax' is Gross pay less 2022 total 'Pension and/or avc' amount as per payslip.

Also, I note this total 'Pension and/or avc' included the total ASC amount for 2022. Therefore it appears that tax relief was given on the ASC contribution?

I am currently calculating the amount for my spouse's one off avc payment for 2022 and therefore will contribute 20% * gross pay less the total 'Pension and/or avc' 2022 amount (as already deducted by payroll under THE SPSPS) .

Perhaps someone could advise if I'm mistaken as this appears to contradict Early Risers advice in relation to the ASC not being allowable.
 
As far as I remember, ASC is classified as an expense and dealt with the same way as flat rate expenses. It is a deduction for income tax purposes and not counted as a pension contribution towards the age related percentage.
 
Thank you for your clarification. Currently doing this for my spouse, a 35 year old civil servant on the 2013 pension. I know she's allowed pay 20% of gross salary into an avc for 2022, but was wondering that say if she paysb25% into it, would she be able to carry that 5% across to 2023 for tax relief or is there any way to get that overpayment back if not?
 
Quick question, if avc exceeds paye actually paid, does the extra amount get rolled over to be claimed next year? I pressume revenue do not give relief of an amount that exceeds paye paid in the relevant year?
 
@Tadhg22

If you're asking does the My Account system automatically carry forward an overpayment, I don't know. Only someone who has done this or Revenue can answer that.

At a guess, I'd say no becuase there a specific box/section that asks 'Amount carried forward from a prior year, for which relief has not been obtained'

So, in your example above she'd put the 20% figure in for 2022 and next year she'd put the 5% in for 2023 + whatever new money she pays around this time next year in a separate box/section. If completed correctly the My Account system ensures that you do not go over your age related tax limits.

You'd have the proof of payment of the 25% on the PRSA2 Certificate so it couldn't be disputed.

Gerard

www.prsa.ie
 
GSheehy said:
@Tadhg22

If you're asking does the My Account system automatically carry forward an overpayment, I don't know. Only someone who has done this or Revenue can answer that.

At a guess, I'd say no becuase there a specific box/section that asks 'Amount carried forward from a prior year, for which relief has not been obtained'

So, in your example above she'd put the 20% figure in for 2022 and next year she'd put the 5% in for 2023 + whatever new money she pays around this time next year in a separate box/section. If completed correctly the My Account system ensures that you do not go over your age related tax limits.

You'd have the proof of payment of the 25% on the PRSA2 Certificate so it couldn't be disputed.

Gerard

www.prsa.ie
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Thank you. Also does anyone know if for public sector workers, is net relevant earnings the same as gross income for usc or total income for income tax (which is net of employee deductions under the spsps?)
 
Tadhg22 said:
Thank you. Also does anyone know if for public sector workers, is net relevant earnings the same as gross income for usc or total income for income tax (which is net of employee deductions under the spsps?)
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Anyone have any ideas on this?
 
As long as I make an avc PRSA pension contribution by 31 October 2023, is it okay if I then actually claim this for 2022 on my 2022 income tax return via My Account on Revenue at a later date or must I have my income tax return done by 31 October 2023 too? (PAYE Worker, no other income)
 
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