Employee contributions to approved occupational pension schemes, including AVCs, are exempt from income tax, subject to certain limits, as are contributions made by self-employed individuals to retirement annuity contracts. Similar relief applies to contributions to personal retirement savings accounts (PRSAs). With effect from 1 January 2006, the maximum annual tax relieved contribution that an individual may make towards all of his or her pension funds is determined by the individual's age and the level of his or her remuneration, subject to an overall earnings cap which currently stands at €254,000. The age related percentage limits are as shown in the table.
Age
|
Limit as a % of relevant earnings
|
|
%
|
Under 30
|
15
|
30 to 39
|
20
|
40 to 49
|
25
|
50 to 54
|
30
|
55 to 59
|
35
|
60 or over
|
40
|
If the pension contribution (including an AVC contribution) exceeds these percentages, the excess contribution can be brought forward to a following tax year against relevant earnings for tax relief purposes (subject of course to the above annual percentages not being exceeded in any one tax year).
I understand that the position regarding PRSI refunds on pension contributions (which also cover the health contribution elements of PRSI), insofar as it relates to individuals paying tax through the PAYE system, was set out to you in a recent response to a question to my colleague the Minister for Social and Family Affairs, Deputy Brennan. My understanding is that such refunds do not apply in the case of self-employed individuals paying tax under the self-assessment system.