Executive Pension

What is an Executive Pension?

An Executive Pension is a pension plan that is set up by a limited company/employer. It is designed to help Company Directors and Executives save for retirement and grow their wealth substantially. It allows you to transfer profits from the company’s bank account into the pension thereby turning company profits into personal wealth.

Employer Contributions to a Pension

As a Company Director, instead of taking your profit as income and therefore paying 40% Income tax, you put it in your pension. There is also potential for a broader scope for tax free cash at retirement.

When the company contributes to the pension you are reducing the profits in the business. Here, the company is allowed to record the pension contribution as a company expense, reducing the company’s corporation tax. The contributions are not subject to a benefit-in-kind charge in your hands for income tax purposes.

By making a contribution through the company, rather than a personal/salary payment, you are exempt from paying PRSI, as it’s not paid as income.

How much can a Company contribute to a Directors Pension in Ireland?

The employer can contribute as much as is needed to provide the maximum benefits allowed by Revenue at retirement. As a Company Director, Revenue allows you to build up a pension fund that will provide you with a pension of 2/3rds of the final pensionable salary. The only limit relates to the Lifetime Pension Fund Limit (Standard Fund Threshold, currently €2,000,000).

However, that being said, as at 1 January 2023, the Finance Act has now introduced a new update to Personal Retirement Savings Accounts (PRSA) that may make it a more attractive option for you, over the Executive Pension.

PRSA UPDATE | As at January 2023

Employers will now be able to pay unlimited BIK free contributions to a PRSA for an Employee or Company Director. The contributions will not be limited to salary and service, existing scheme funding or retained benefits.

As a Company Director or small employer, if you are on a higher salary, you now have the option to extract a larger amount of profits in which all contributions paid will receive immediate tax relief in the year that it is paid.

This means PRSA’s may now offer you a more flexible and suitable means to retirement saving and planning according to your particular financial needs.

Find out more



Advantages of a Directors Pension

  • Tax Efficient Employer contributions are exempt from Income Tax, PRSI, and USC, and is not subject to benefit-in-kind (BIK) for income tax purposes. 
  • Contributions There is significant scope available to fund for past service through a Special Contribution.
  • Tax-free Lump Sum Potential for larger tax-free lump sum through salary & service route.
  • Flexibility Any contributions made by a company to a Directors Pension are flexible. You can increase your contributions, or make a one-off contribution, at any stage.
  • Tax Relief Higher tax-deductible contribution levels for Directors, unlike personal pension age-related limits.
  • Choice Offering a wide range of investment options, designed to meet your needs.
  • Early Retirement Benefits can be accessed from age 50 onwards (subject to conditions).
Directors Pension Post

When can I draw down on my Pension?

You could retire and access benefits as early as age 50, with trustee permission, and where employment has terminated. The amount of benefits on retirement depends on the level of contributions paid and the investment return earned on those contributions.

You are entitled to the take benefits in one of two ways:

Option 1:

A once-off lump sum of 25% of the value of the fund, and the balance of the fund must be used to invest in an Approved Retirement Fund (ARF).

Option 2:

A once-off lump sum of up to 1.5 times final salary, and the balance of the fund must be used to invest in an Annuity.


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