Tax Relief available-Govt. Top up PRSA vs Standard Pension

C

construct_06

Registered User
Messages
129
Did anyone see the Sunday Business post last Sunday. It had some interesting views on how a higher rate tax payer would be losing out if they availed of the Govt. SSIA-PRSA top up.

Figures were astounding really. This has really put the kaibosh on me as i had made my mind up to invest 7500 of my SSIA in this Govt backed PRSA. But now i find out i could be better off starting a standard pension and availing of the normal tax relief...

[broken link removed]

Advice would be welcome..

I have no pension currently. I am 29. What is a standard pension? Can this be carried from job to job like a PRSA, can employer contribute?...
​
 
The SSIA PITC is only for people earning less than 50k.

If you pay tax at the 41% rate then you should ignore it, and go for a PRSA, or a personal pension (RAC). You get more in tax relief than the PITC incentive is worth.
 
The article is fairly clear cut to me, as is your reply.....

Do not take out this offer if you are on the higher 41% tax rate, you are being ripped off if you do..

I would consider myself fairly well informed but i nearly got caught with this.....

I hope others are well aware of this......
 
I nearly got caught with this as well. I have a private PRSA pension and a company run scheme.

If I put the same lump sum (7,500) into either what are the tax benefits?
 
First of all, there is no "rip-off".

If you put 7500 from your SSIA into a pension schene, and the govt add 2500, then you have a pension fund of 10k.

This 10k has cost you just 7.5k.

Whereas, if you are a 20% taxpapyer and put 10k gross into a pension it would cost you 8k net. So you should go for the SSIA PITC incentive.

However, for a 41% taxpayer, 10k in their fund would cost them 5900 net, so they should not bother with the SSIA PITC incentive.

They should just make regular pension contributions.
 
Protocol said:
This 10k has cost you just 7.5k.

Whereas, if you are a 20% taxpapyer and put 10k gross into a pension it would cost you 8k net. So you should go for the SSIA PITC incentive.
Click to expand...
For most 20% taxpayers on class A prsi, they will also save the 6% PRSI, so the €10k gross will cost them 7.4k
 
Yes, true.

So if you save into your pension via the SSIA PITC, your 7.5k gets you 2.5k bonus, plus, I assume, PRSI relief on the 7.5k.
 
No further relief (PRSI or any other) when one goes down the PITC route.
 
You must log in or register to reply here.
Back
Top