fbpx

Income Protection Ireland Case Study

Income Protection Ireland Case Study

 

If you had to ask the average person on the street what an Income Protection policy means to them, most would arguably reply that they have no need for it or that its a waste of money to pay all those premiums because they’ll likely never be able to use the policy.

 

However, coming across the countless amounts of people claiming on their Income Protection policies in Ireland, we beg to differ.

 

To demonstrate the importance and potential need for an Income Protection plan, we have put together a case study and some success stories of claimants who were fortunate enough to have secured an Income Protection policy prior to severely injuring themselves or falling victim to a serious illness.

 

 

How can Income Protection help me?

 

Income Protection is a form of insurance that replaces your income if you can’t work due to an illness, injury, or disability. If you are put out of work because of this and you don’t have Income Protection, it can quickly become a worrisome situation, as you would still have mounting bills to pay but no replacement income to pay for them. Sure, you may get sick leave from your employer, but likely not enough.

 

An Income Protection plan gives you a replacement income as long as it takes to get you back on your feet and return to work, or a ceasing age (date) of your choosing. It will cover up to a maximum of 75% of your salary and a maximum benefit amount of €262,500, and the cost depends on the percentage of income that you want to insure and when you would like the benefits to kick in. Depending on your budget, you can tailor the amount of cover suitable to your needs. Refer to the below example, where we will illustrate an Income Protection Ireland case study…

 

Do I need income Protection?

 

 

 

 

Can I get Income Protection tax relief in Ireland?

 

Yes, you can. The tax relief will reduce the cost of your cover by up to 40% if you pay income tax at the higher rate.

 

 

Income Protection Ireland Case Study

 

Income Protection Ireland Case Study

 

Many of us would face financial difficulties if we couldn’t work for a period of time due to an accident, injury or illness. Here’s a journey below to help you think about the impact of life with or without Income Protection:

 

Profile:

Meet Greg.

Age 35, and owns his own home.

He works as a computer programmer and earns a salary of €52,000 a year.

 

An accident leaves Greg with a serious back injury, which results in him not being able to work for the next 5 months until his operation. Doctors have advised that his recovery may take a further year and a half.

 

In this example Greg’s Income Protection plan provides a monthly benefit of €2,244 (75% of gross income less current state illness benefit) until he’s age 68 after after a 13 week deferred period.

 

 

Greg’s life WITHOUT Income Protection:

 

 

Income Protection Ireland Case Study

 

Greg has €3,000 in savings but has no other financial protection in place.

 

 

Income Protection Ireland Case Study

 

Greg will receive sick pay from his employer for the first 3 months of his absence.

 

 

Income Protection Ireland Case Study

 

Company sick pay ends, and Greg is surviving on the state illness benefit of €232 per week and needs to dip into his savings to pay his bills. Greg is very anxious due to his ill health and financial situation, but he cannot afford to seek professional help.

 

 

Income Protection Ireland Case Study

 

It’s Greg’s fourth month at home waiting for his surgery. He continues to receive the Social Welfare pay of €232 per week. Despite cutting back wherever he can, Greg still faces a significant shortfall between his income and his outgoings. He’s forced to use the rest of his emergency fund and now has to rely on his credit cards to cover his bills and expenses.

 

 

Income Protection Ireland Case Study

 

Greg has had his surgery and returns home for a further period of time for post-op recovery. His emergency savings have been completely depleted. Greg has to go to his parents to ask for a loan.

 

 

Income Protection Ireland Case Study

 

For financial reasons, Greg needs to return to work. He would benefit from physiotherapy, but unfortunately, he cannot afford to pay for private physiotherapy. While he was off work and dependent on the state illness benefit, he had to make difficult financial decisions. Greg could no longer afford to pay his mortgage and had to move home to his parents and rent out his home to ensure his mortgage repayments were paid.

 

 

Complete the form below for an Income Protection quote...

 

 

 

Greg’s life WITH Income Protection:

 

Income Protection Ireland Case Study

 

Greg’s broker helps him search the market for an Income Protection plan that best suits him. After careful consideration and assessing his options, he decides to go with Aviva. Greg has €3,000 in savings and now has an Income Protection policy which gives him a monthly benefit of €2,244. This policy also gives Greg access to Aviva Care at no extra cost.

 

 

Income Protection Ireland Case Study

 

Greg gets sick pay from his employer for the first 3 months of his absence. He is admitted to hospital for tests over a 2-week period and claims on his hospital cash benefit which was automatically included in his Income Protection plan, and receives €318 per day for the duration of his stay in hospital. His doctor has recommended surgery and advised that his recovery will be slow so he submits his Income Protection claim to Aviva.

 

Using Aviva Care, he decides to get a second medical opinion through the Best Doctors service regarding his surgery.
Greg receives his second medical opinion, which agrees that surgery is the right course of action. This gives him greater peace of mind.

 

 

Income Protection Ireland Case Study

 

His deferred period has come to an end, and his Income Protection claim is accepted. He receives his first payment of €2,244 per month from Aviva, along with his state illness benefit of €232 per week. His waiver of premium benefit means he no longer pays his monthly Income Protection premium while on claim.

 

Greg can pay all his bills. Greg decides to reach out to the Aviva Care mental health service due to the anxiety he’s feeling regarding his ill health. This enables him to speak to a psychologist at no extra cost

 

 

Income Protection Ireland Case Study

 

It’s Greg’s fourth month at home, but with his monthly Income Protection payment, Greg can cover all his monthly bills and expenses. He doesn’t need to dip into his savings. The Mental Care service that he has availed of has given him coping mechanisms to deal with the stress and anxiety he was initially feeling regarding his accident

 

 

Income Protection Ireland Case Study

 

Greg has had his surgery and returns home for post-op recovery. He doesn’t have any financial concerns, so he can focus on his recovery.

 

 

Income Protection Ireland Case Study

 

Greg has fully recovered from his surgery and is ready to return to work. During the period of his claim, his Aviva claims handler arranged ongoing rehabilitation benefits at no extra cost, assisting in his full recovery. As his Income Protection policy replaced 75% of his earnings during this period, Greg’s finances are in good shape, and he feels ready to return to work.

 

 

Income Protection Success Stories

 

Carole’s Story: Injury/Accident

 

Problem: Back injury accident & heart surgery

Solution: Income Protection plan

Result: Income Protection paid for the physio to treat the injury; heart surgery, and pay for her mortgage and utility bills. She then recovered from the injury and was able to return to work in a reduced capacity.

 

Income Protection Success Stories Carole's Story InjuryAccident

 

 

 

 

Marc’s Story: Injury/Illness

 

Problem: Blood clot & heart condition

Solution: Income Protection plan

Result: Income Protection paid for treatment for his heart conditions, and still regularly pays for his bills.

 

Income Protection Success Stories Marc's Story Injury-Illness

 

 

 

 

 

How we can help you:

Contact us for Financial Advice

 

Compare the Market:

Save time and the stress of guessing who the best insurer is. We quote all providers across the market to ensure you have a plan that is best suited to your particular needs.

 

Policy Review:

If you have a current plan, we can review your benefits to see if you are getting the most out of your plan.

 

Save you Money:

We could help you to reduce the cost of your premium. For example, if you have stopped smoking for the last 12 months you could get a premium discount of up to 50% off your current premium.

 

 

Need a Quote, or to speak with a Financial Advisor?

Fill out your details and inquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

DD/MM/YYYY
e.g. €40,000
Select 'Smoker' if you have smoked tobacco products in the last 12 months.
Any additional comments?

 

The Benefits of Employer Pension Contributions

 

Pensions play a vital role in helping individuals secure their financial future, especially in retirement. While personal contributions are essential, the role of employers in providing pension schemes should not be overlooked. In this post, we will explore the benefits of employer pension contributions and why they are crucial for employees and employers.

 

 

Increased Retirement Savings

Employer pension contributions serve as an additional source of funding for employees’ retirement savings. By contributing to an employee’s pension plan, employers help employees build a more substantial retirement fund over time. This extra boost can make a significant difference in the overall amount employees can accumulate before they reach retirement age, providing them with a more stable and comfortable financial future.

 

 

Tax treatment of employer pension contributions

 

One significant advantage of employer pension contributions is the tax benefits they offer to both employers and employees. In Ireland, employer contributions to pension schemes are tax-deductible for corporation tax relief, helping to reduce the overall tax liability for the employer. 

 

For employees, any employer contributions made to their pension are not considered part of their taxable income, effectively reducing their tax obligations. These tax advantages make employer contributions an attractive option for both parties!

 

Let’s look at an illustration below…

 

 

Profile:

 

Marie is age 45.

Annual salary: €45,000

Pension tax relief (based on age and earnings): 25%

Maximum allowable annual contribution: €11,250

 

If you are enrolled in an employee pension scheme, the contributions made by your employer to your pension are not deemed taxable as a Benefit-in-Kind (BIK), which essentially means that you are not taxed on the contribution that your employer makes on your behalf.

 

For instance, based on the details above, Marie has the option to contribute up to 25% of her salary towards her pension. Currently, she contributes 10% of her salary each month, and her employer also contributes 10%.

 

 

Marie and her Employer’s Pension Contributions

 

Marie and her Employer's Pension Contributions

 

Due to Marie’s pension tax relief, at the higher marginal rate of 40% tax, her total contributions of €9,000 will only cost her €2,700 Net.

 

 

Marie contributes an AVC of 15%

 

In addition to these regular contributions, Marie has the ability to make an Additional Voluntary Contribution (AVC) once a year, equivalent to 15% of her salary. By doing so, she can maximize the tax relief benefits available to her. As a result, the combined contributions from both Marie (25%) and her employer (10%) could reach 35% of her gross salary annually.

 

Marie contributes an AVC of 15%

 

By making an Additional Voluntary Contribution (AVC), Marie can maximize her contributions to avail of pension tax relief. She can contribute up to €15,750 annually with a combination of personal contributions, employer contributions, and AVC’s, while only costing her €6,750.

 

 

Employer Contributions to a PRSA

 

If you are a business owner or company director, you can also consider the updated Personal Retirement Savings Account (PRSA) funding opportunities that you may not be aware of.

 

As of 2023, a new change to pensions legislation resulted in a significant opportunity for company directors and business owners to fund larger pension pots than before. Since then, an employer contribution to a PRSA for an employee, is also no longer taxable as a Benefit-In-Kind (BIK) for that employee.

 

In essence, this change now allows an employer to contribute to a PRSA with no upper limit on employer contributions. In fact, the only limit is the lifetime Pension Fund limit which is currently €2,000,000. This rule change will be of significant interest for business owners and directors, as it means that they can now move profits from their business into a PRSA for themselves, for employed family members, and for employees.

 

 

Click here for illustrations

 

 

 

 

 

Complete the form below to get advice on your options

 

 

 

Should I wait for Auto Enrolment Pensions?

 

It is now looking increasingly likely that the government will be rolling out Pension Auto Enrolment in 2025. Here, they will make it mandatory for all employers to contribute towards a worker’s pension, which will be co-funded by the State, and workers/employees will be automatically signed up for a pension when they start work.

 

Who will be Auto Enrolled?

 

Anyone between the ages of 23 and 60, and who is earning over €20,000 a year, will automatically be enrolled into the pension scheme when they start a new job unless they have their own pension or access to an occupational pension.

 

How will Auto Enrolment affect employer and employee contributions?

 

Employer’s contributions will be capped at €80,000 gross annual salary. So for example, for the first three years in the scheme, the maximum amount the employer and employee will each be able to contribute per year to the pension will be 1.5% of salary (€1,200 each). The government will also contribute an additional 0.5% (€400) per year to the scheme. However, if you earn over €80,000 you can still contribute but your employer or the Government won’t match your contributions on earnings in excess of this.

 

Will Auto Enrolment benefit higher-earners?

 

Referring to the above case study with Marie, Auto Enrolment will have fewer incentives for higher-income earners from a contribution limit perspective, as most employer (occupational) pension schemes will be able to match an employee’s contributions up to a certain limit—5% is average, but it can be up to 10% in some cases. Not to mention that if you contribute to a PRSA, you have the potential for an even higher scope for employer contributions for an employee or Company Director! So, more generous.

 

Auto Enrolment will also be less generous from a tax perspective. If you pay tax at the top rate of 40%, this is the equivalent of the Government giving you back €400 back for every €1000 that you save, whereas, the Auto Enrolment scheme will only offer 33% tax relief. So you will get more bang for your buck if you are a single person earning over €42,000 p.a and you pay tax at the higher marginal rate of 40%.

 

On the other hand, if you earn under €42,000 as a single person, you therefore only pay tax at 20%, this is the equivalent of the government giving you €200 back for every €1000 that you save. So, the Auto Enrolment scheme will be more generous for lower-income earners (33% tax relief available). 

 

Auto Enrolment Summary:

 

Higher-income earners: Better to save into an occupational pension offered by your employer.

Lower-income earners: Better to go with the Auto Enrolment scheme.

 

 

More on Auto Enrolment Pensions

 

 

 

 

 

Employee Attraction, Retention, and Engagement

 

Employee Retention and Attraction

Offering a competitive pension scheme with employer contributions for your staff can significantly improve employee retention and attraction. In today’s job market, employees value benefits that go beyond salary, and a robust pension plan with employer contributions is highly valued. If you are an employer and offer your employees a pension plan, they will be more likely to stay with your company as they will feel valued. Additionally, pension benefits can help attract talented individuals who are seeking opportunities with companies that prioritize employee well-being.

 

Improved Employee Engagement

An employer pension plan can also improve employee engagement. When employees feel that you are invested in their financial future, they are more likely to be motivated and engaged in their work. A sense of security and confidence in their retirement savings can alleviate financial stress and allow employees to focus on their current responsibilities. As a result, as an employer, you may find increased productivity, higher job satisfaction, and a positive work environment.

 

 

What are my options?

 

1. Employer pension:

  • If your company gives you the opportunity to join their pension scheme, it is advisable to contribute to the scheme as this is a fantastic way to build up your retirement savings in tax-efficient manner. If you want to know how much you and your employer contribute to the plan, get these details from your employer. It’s a good idea to find out if you can take advantage of AVCs to increase your contributions and enjoy the associated tax benefits.

 

  • If you are an employer, you have various employer pension options available to you, such as an Executive pension, Master Trust pension, or PRSA. You will need to carefully assess these options as they are not a one-size-fits-all. These will depend on your requirements as a business owner, especially if you are considering your own retirement provision needs.

 

2. Private pension:

  • If your workplace doesn’t offer an employer pension plan, you can set up your own PRSA (Personal Retirement Savings Account) and make your own contributions through your payroll. Your employer is obliged to give you access to at least one Standard PRSA. You will also receive PRSA tax relief at source on your contribution through your payroll.

 

 

Where to from here:

 

Employer pension contributions have numerous benefits for both employers and employees. They increase retirement savings, provide tax advantages, aid in employee well-being, and enhance an employer’s reputation. If you are an employer and are thinking about the best pension options for you and your staff, our Financial Advisors have an array of pension contribution and funding options available to you.

 

If you’re an employee, you may have questions or need help reviewing your company pension scheme. You may also be looking at other funding options such as AVC’s. You may be in a job where there is no company pension scheme at all. Our Financial Advisors can assess your situation and advise on the best options available for you.

 

Feel free to submit your details below and our financial advisors will get back to you promptly.

 

 

Speak with a Financial Advisor:

Fill out your details and inquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

Mortgage Protection After Cancer in Ireland

Cancer Survivors can now access stress-free Mortgage Protection

 

Cancer survivors can now gain access to mortgage protection without being penalised due to their previous health history (subject to certain conditions below).

 

Previously, survey evidence by the Irish Cancer Society had found that cancer survivors experienced considerably more difficulty dealing with insurers, especially banks, calling for an enforceable “right to be forgotten”. Those difficulties related to outright refusal of cover, excessively high premiums and unduly burdensome processes involved in securing cover.

 

The new Code of Practice, recently published by Insurance Ireland, will increase the availability of cover for cancer survivors, and will allow for a faster, easier, and more streamlined process when applying for your mortgage protection policy. Additionally, existing mortgage protection policyholders will now have the opportunity to shop around and search the marketplace for better pricing, where their premiums should now be significantly cheaper.

 

It is important to note that in order to secure mortgage approval for a home purchase, it is compulsory to take out mortgage protection (decreasing life cover) to cover the value of the mortgage (loan) on your home.

 

 

Am I eligible for the new Code of Practice for Cancer Survivors?

 

Under the new code, Irish Life Insurer’s will disregard a cancer diagnosis if you are in complete remission and treatment for your cancer ended more than seven years before any application for cover. Where the cancer had been diagnosed under the age of 18, the time limit falls to five years.

 

As a cancer survivor, you will be able to get mortgage protection cover up to a value of €500,000 for your primary residence (main family home), however, the code does not apply to mortgages on second homes or investment properties.

 

Regarding the underwriting process, you still have to disclose your history of cancer but the insurer will ignore it when underwriting your application if it satisfies the required conditions.

 

 

How will this benefit me | Mortgage Protection After Cancer in Ireland

 

 

 

Can I switch my existing policy?

Yes, if you hold an existing mortgage protection policy and are paying a high premium, you will now have the opportunity to shop around for better pricing. Fill out the form below, and our team will search the marketplace to find you a significantly cheaper premium.

 

Complete the form below for a Mortgage Protection quote | Mortgage Protection After Cancer in Ireland

 

 

 

Who are the available Life Insurer’s?

 

The insurers agreeing to operate the voluntary code are: Irish Life, Royal London, Zurich Life Assurance, Aviva Life and Pensions, New Ireland Assurance, Acorn Life, and Laya Healthcare. 

 

 

Which Life Insurer's are available | Mortgage Protection After Cancer in Ireland

 

 

 

Where to from here?

As a cancer survivor, your chance of obtaining affordable insurance coverage can now become a reality, without unnecessary barriers towards home ownership or stigmatisation associated with your previous medical condition.

 

 

Contact us for a quote:

Fill out your details and inquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

DD/MM/YYYY
Select 'Smoker' if you have smoked tobacco products in the last 12 months.
You need to cover the amount you are borrowing. Input the current amount outstanding on your loan.
Selected Years: 10
Select the amount of years you need the cover for.

 

PRSA Opportunities for Company Directors in 2024

Are you a Company Director or Business Owner?

 

If so, you need to consider the updated PRSA pension funding opportunities available.

 

At the beginning of January 2023, a small wording change to pensions legislation resulted in a significant opportunity for company directors and business owners to fund larger pension pots than before. Since then, an employer contribution to a Personal Retirement Savings Account (PRSA) for an employee, is no longer taxable as a Benefit-In-Kind (BIK) for that employee, which essentially means that you are not taxed on the contribution that your employer makes on your behalf.

 

In essence, this change now allows an employer to contribute to a PRSA with no upper limit on employer contributions. In fact, the only limit is the lifetime Pension Fund limit which is currently €2,000,000. This rule change will be of significant interest for business owners and directors, as it means that they can now move profits from their business into a PRSA for themselves, for employed family members, and for employees.

 

 

How is this different to before?

 

Prior to 1st January 2023, employer contributions into a PRSA were taxable as a Benefit in Kind (BIK) and could create an income tax liability for the employee if employer and employee contributions to the PRSA in the relevant year exceeded that employee’s own personal age related limits.

 

For that reason, many company directors chose a different type of pension arrangement, an Executive Pension, to fund for their retirement as those arrangements offered much greater scope to make an employer contribution into the pension scheme on their behalf. Executive Pensions were (and still are) subject to ‘funding checks’ to ensure contributions are within the generous limits.

 

 

Employer and Employee contributions and PRSA’s

 

Since January 2023, employer contributions to a PRSA no longer form part of the employees own age-related limits for pensioning their income. It is for this reason that PRSA’s now offer an alternative to Executive Pensions for Company Directors planning for their retirement and offer some new opportunities for retirement planning. Employee contributions are still subject to the age-related contribution limits and the Earnings Cap, currently €115,000.

 

PRSA Opportunities for Company Directors in 2024. Complete the form below to get advice on your options

 

 

 

Let’s explore some of the new PRSA opportunities

 

 

1. Company Directors or Business Owners on modest salaries:

PRSA Opportunities for Company Directors in 2024. Company Directors or Business Owners on modest salaries

 

Profile:

John is age 50 and married.

Retirement age: 60.

Annual salary: €20,000.

Current pension fund value: €300,000.

 

Current pension arrangement:

John is currently invested in a Master Trust Executive Pension which is subject to funding limits.

 

His Pension Advisor recently calculated John’s maximum funding limit, which allows him to fund for a total pension fund of €432,000. As he already has €300,000 saved, the maximum he can save into his pension from now until retirement is €13,200 per annum over 10 years.

 

New PRSA opportunity:

Under the new PRSA rules, John’s business can invest up to another €1,700,000 into a PRSA for him as the only PRSA limit which now applies is the lifetime limit of €2,000,000.

 

 

 

2. Family business with excess profits:

PRSA Opportunities for Company Directors in 2024. Family business with excess profits

 

Profile:

Alex and Susan are employed in the business.

David, their son, is also employed in the business.

 

Current pension arrangement:

Alex and Susan have funded Executive Pensions to €1,000,000 each and their son David has a pension fund in place of €300,000.

 

New PRSA opportunity:

Under the new PRSA rules, both Alex and Susan can fund a PRSA by an additional €1,000,000 to bring their pension funds up to €2,000,000 each. As Alex is employed in the business there is also an opportunity for the business to fund a PRSA up to the maximum lifetime limit of €2,000,000 – so an additional €1,700,000 above his current €300,000.

 

 

 

3. An Investment Company:

PRSA Opportunities for Company Directors in 2024. An Investment Company

 

Profile:

Amy holds a number of rental properties within a holding company.

She draws a salary from the business.

 

Current pension arrangement:
As a 20% Director of an Investment Company, Amy is excluded from taking out an Executive Pension.

 

New PRSA opportunity:

No such restriction has been made in respect of PRSAs, so an investment company could contribute to a PRSA for the benefit of a 20% director that is employed by that company. It’s important to note that Amy must be drawing a salary which is taxable under PAYE in order to access the PRSA route.

 

 

 

4. Company Directors who have already accessed an Executive Pension:

PRSA Opportunities for Company Directors in 2024. Company Directors who have already accessed an Executive Pension

 

Profile:

Byron funded an Executive Pension.

He accessed it last year under the Normal Retirement rules.

He still works in and owns his own business.

 

Current pension arrangement:

Byron funded an Executive Pension for €1,000,000 and took his benefits at maximum retirement age (70) last year.

 

New PRSA opportunity:

As Byron still works in the business, he can now invest up to another €1,000,000 in a PRSA policy.

 

 

 

5. Self Employed business owner with Spouse employed in the business:

PRSA Opportunities for Company Directors in 2024. Self Employed business owner with Spouse employed in the business

 

Profile:

Matt is a self-employed Accountant.

He can only save into a pension based on his personal income which will be limited by the age-related personal limits and the Earnings Cap.

However, Matt’s spouse, Fiona, is an employee in the Accountancy practice.

As Matt is her employer, he wants to provide a pension arrangement for her benefit.

 

Current pension arrangement:

Matt as the employer set up an Executive pension for Fiona . Both Matt (as Fiona’s employer) and Fiona (as employee) contribute. The employer’s ability to fund is limited by Revenue’s funding limits for Executive Pensions.

 

New PRSA opportunity:

As Fiona is Matt’s employee, Matt as the employer could fund a PRSA on her behalf with potentially no upper limit on the employer contribution possible for Fiona (other than the Employers capacity to make such a contribution and the overall lifetime limit for the maximum pension pot (Standard Fund Threshold).

 

PRSA Opportunities for Company Directors in 2024. Complete the form below to get advice on your options

 

 

Where to from here:

 

Maximizing pension funding is always high on the list for company Directors and business owners just like you. There are usually significant volumes of PRSA contributions in the months of November and December as Small and medium-sized enterprises (SMEs) close out their accounts.

 

Above we’ve provided a brief outline of the five PRSA opportunities in the marketplace right now, but this is by no means an exhaustive list. Be sure to sit down with one of our Financial Advisors to discuss your personal situation and get advice on what option best suits you and your business.

 

 

Speak with a Financial Advisor:

Fill out your details and inquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

Selected Value: 0
Selected Value: 50

How to Reduce your Income Tax Bill

How to Reduce your Income Tax Bill

 

Every year thousands of people across Ireland use their pension as a great way of reducing their tax liability. Not only is contributing to a pension the most tax-efficient way to claim tax back from Revenue, it is also the most effective method of growing your wealth for retirement.

 

If you feel you are paying too much tax, the good news is that you can claim tax relief and you may even be entitled to a refund of some of the Income Tax you paid in 2022/23.

 

1. Tax relief on contributions – You can claim tax relief on contributions at your higher rate of income tax, 20% tax relief for lower earners and 40% tax relief for higher earners on all pension contributions.

2. Tax free growth – You do not pay tax on investment growth within your pension fund (No CGT, DIRT, or income tax).

 

Tax Relief illustrations applicable to you

 

 

How to Reduce your Income Tax Bill - Tax Saving Opportunities for the following

 

Pension Contribution Limits

 

There are annual limits on the amount you can contribute to your pension while receiving tax relief. Contributions are limited by your age and income level, and full tax relief within these limits may be obtained. The maximum amount of earnings allowable for calculating tax relief is €115,000 per year.

 

Maximum Allowable Contributions | How to Reduce your Income Tax Bill

 

Standard example:

Fiona is 45 and earns €60,000 per year. The maximum she can contribute to her pension is 25% of €60,000, which is €15,000. In this example, Fiona is in the higher tax bracket, and has a marginal rate of tax at 40%.

 

This means she can claim 40% tax relief (€6,000) back from the state on all her contributions, and will only being paying a net amount of €9,000, while realizing the total €15,000 contribution into her pension.

 

Complete the form below | How to claim tax relief via your pension!

 

 

If you are Self Employed

Paying too much tax

 

If you are self-employed you must calculate your tax liability and make a payment by 31 October 2023 (or 15 November 2023 for ROS users) in respect of your:

1. Final Tax Assessment for 2022;

2. Preliminary Tax for 2023.

 

You can reduce your 2022 Final Tax liability and your 2023 Preliminary Tax liability by making contributions to a Personal Pension Plan or PRSA and electing to backdate the tax relief to 2022.

 

Example:

Rob is self-employed, aged 45 years, and his Net Relevant Earnings for 2022 were €80,000. He has paid €15,000 Preliminary Tax in 2022 and his total tax bill for 2022 is €22,000. This leaves him owing €7,000 for 2022. He does not currently pay pension contributions. The two scenarios below show just how a lump sum pension contribution can save Rob lots of money!

 

Self Employed Tax Relief Calculation

 

 

If you are a Company Director

 

If you are a Proprietary Director (i.e. a director who owns or controls more than 15% of the shares in your company), you are obliged to file self-assessment tax returns by 31 October 2023 (or 15 November 2023 for ROS users) in respect of last year, even if all of your income is taxed under the PAYE system.

 

If your income includes non-PAYE income you must pay any balance of Income Tax, PRSI and USC outstanding from last year. You will also need to consider paying Preliminary Tax for the current year.

 

You can reduce your 2022 total tax liability and you may even receive a refund from Revenue. This can be achieved by personally making a Lump sum pension contribution 31 October 2023 and also by this date electing to backdate the tax relief to 2022.

 

Example:

Anne Marie is a proprietary director i.e. a director who owns or controls more than 15% of the shares in her company. She paid Income Tax at the 40% rate in 2022. She makes a pension contribution of €20,000 by 31 October 2023, which is within the age-related limits allowed. With her return of income for 2022 she informs her local tax office by 31 October 2023 of this payment and of her desire to backdate the tax relief on this to 2022. She is entitled to the following refund:

 

Co. Director Tax Relief Calculation

 

What type of pension plan?

 

Your company can contribute to an occupational pension scheme or PRSA on your behalf, in respect of your income from your company. You may also make Additional Voluntary Contributions (AVC’s), a PRSA AVC or even contribute to another PRSA plan of your choice if the company is already paying into the occupational pension on your behalf  (subject to scheme rules).

 

If your company does not contribute to an Occupational Pension arrangement or PRSA on your behalf, you can make contributions to a Personal Pension plan or a PRSA plan in respect of your income from your company.

 

If you are an Employee

 

If you feel you are paying too much tax, the good news is that you may be entitled to a refund of some of the Income Tax you paid in 2022 by making a lump sum contribution to a Personal Pension, PRSA or PRSA AVC, depending on your employment circumstances, by 31 October 2023 (or 15 November 2023 for ROS users) and electing to backdate the tax relief to 2022.

 

Example:

Johanne is a 35 year old employee who paid Income Tax at the 40% rate in 2022. She makes a pension contribution of €10,000 by 31 October 2023 and informs her local tax office by 31 October 2023 that she wishes to backdate relief on this to 2022.

 

She is entitled to the following refund:

 

Employee Tax Relief Calculation

 

 

 

How do I get started?

1. Complete the below form.

2. A Financial Advisor will help you calculate the contribution amount needed to reduce your tax liability.

3. Advise on a suitable pension option for you.

4. Assist with your Revenue return submission (to be filed on ROS to claim income tax relief on pension contributions).

 

 

Speak with a Financial Advisor:

Fill out your details and inquiry below, and one of our Qualified Financial Advisors will get back to you shortly.

Age: 0