Pension Zone

Q: Does it still make sense for me to continue to contribute to my pension now that PRSI and Health Levy relief are no longer available?

A: Yes. It still makes sense to contribute to your pension as a pension can provide the most tax efficient way of saving for retirement even with the removal of PRSI and Health Levy relief.      

Q: Can I still get tax relief on my pension contributions at my marginal rate of income tax?

A: Yes. For 2011, you will continue to get tax relief at 41% if you are a higher tax rate payer. If you are a lower tax rate payer 20% relief is available.

Q: I have heard that pension tax relief is going to reduce to 20% by 2014, was this allowed for in the budget?

A: No, there was no change to pension tax relief in the budget.The 4-year National Recovery Plan proposed that income tax relief on personal contributions be reduced on a phased basis as follows: Year Tax...

Q: What is included in the new Universal Social Charge?

A:     The Health Levy and Income Levy are to be abolished and replaced by a new Universal Social Charge in 2011, at the following rates and thresholds:  Universal Social Charge Income Level ...

Q: What is the cap that is being introduced & what rate of tax will be applied to any lump sum payment in excess of €200,000 at retirement ?

A: The maximum lump sum that can be paid TAX FREE from a pension arrangement will be capped at €200,000 and any lump sum payments in excess of this amount will be taxed. Tax will be charged at 20% on any excess lump sum over €200,000 up to an amount of €575,000. Any excess over...