Use AVCs to Boost Your Pension with a Lump Sum
If you’re already in a pension scheme, you can make extra contributions to boost your retirement savings. These extra payments are called AVCs (Additional Voluntary Contributions, and you can still get tax relief on them. This is a smart and flexible option, especially if you have some extra cash from a bonus, inheritance, or savings.
Click here to learn more about Additional Voluntary Contributions.
Top Up Before the Tax Deadline
Each year in Ireland, there’s a tax deadline, usually 31 October, or a bit later if you file your taxes online using Revenue Online Service (ROS). If you haven’t put much into your pension yet, this deadline gives you a chance to make a lump sum payment and still get tax relief for the previous year.
Here’s how it works:
Let’s say you earned €50,000 last year but didn’t make any pension contributions. You may still add money to your pension and reduce the tax you owe for the previous year. It’s a great way to cut your tax bill and grow your pension at the same time.
You can do this by making a once-off lump sum payment into your pension scheme, even after the tax year has ended, as long as it’s done before 31 October of the following year. When you do, you can choose to have the tax relief apply to last year’s taxes, which can lead to a nice refund or reduce what you owe.
If you’re self-employed or using ROS, you usually get a few extra weeks to make the payment and still qualify for the relief.
Track Down Lost or Forgotten Pension Funds
If you’ve changed jobs a few times over the years, there’s a chance you have pension funds sitting in old schemes that you’ve forgotten about. And if you spent time working in the UK, you might even be able to transfer a UK pension back to Ireland—especially if you’re now returning or planning to stay here long term.
These old and forgotten pensions can be valuable additions to your retirement savings, and tracking them down could give your pension pot a real boost. It’s worth taking the time to look into it—you might be surprised by what you find.
Learn more by reading our article on Pension Tracing in Ireland.
Business Owner or Director? Contribute Through the Company
If you’re a business owner or company director in Ireland, one of the most tax-efficient ways to use your company’s profits is to contribute directly to your pension. Instead of taking profits as salary or dividends, which can trigger hefty taxes, you can transfer them into a company pension plan and enjoy significant tax advantages.
Taking profits as dividends could see you paying up to 40% tax. In contrast, pension contributions made by your company offer several valuable tax advantages:
- No Benefit-in-Kind (BIK) for you as the employer or director
- No employer PRSI on pension contributions
- Immediate corporation tax relief on employer contributions
- Pension fund grows tax-free
- No Capital Gains Tax (CGT) or income tax on investment growth
- You might access your pension from the age of 50
- You can take up to 25% of your pension as a tax-free lump sum at retirement
This strategy not only reduces your company’s tax bill but also helps you build a substantial retirement fund outside of the business. It’s a win-win for your personal wealth and your company’s bottom line.
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