redundancy payments and AVC contributions

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Ndiddy

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Seeing as redundancy can be taxable, does that amount increase the income used to calculate the age related tax benefit?
25k salary, 20k redundancy, does this mean at age 40 I can contribute 25% of 45k before I leave work?
 
To the extent that €20,000 is included as taxable income on your payslip and is subject to PAYE, then yes, your relevant earnings for the purposes of pension contributions and the age-related % is €45,000.

Make the AVC before you leave the employment.
 
Is the 20k an ex-gratia payment or statutory redundancy payment?
Statutory is non taxable, and therefore can’t be used to increase your pension contribution
A certain amount of the ex-gratia will be tax free, for example the basic exemption is approx 10k plus an extra 765 per year of service. only what’s left of the 20k after the exemption could be used to increase your pension contribution.
 
I posted this a few months ago in response to @Ndiddy :

AAAContributor said:
To the extent that €20,000 is included as taxable income on your payslip and is subject to PAYE, then yes, your relevant earnings for the purposes of pension contributions and the age-related % is €45,000.
Click to expand...

I stated that the taxable element of a termination payment could be used to calculate a pension contribution based on the age-related limits. I don't think this was correct as I came across some information yesterday that says otherwise.

This link from revenue would suggest it can't be included as income for pension purposes:

Types of pension contributions

Types of pension contributions
www.revenue.ie www.revenue.ie

Page 7 of this Irish Life guide also seems to confirm that the practice is that it is not considered income for pension purposes:


It would be great if anyone familiar with this area could confirm my revised understanding. Thanks
 
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