Many people are not aware that the contribution payments they make to their pension every year are eligible for tax relief.
If your pension payments are made through your employer or the PAYE system, your tax relief is probably already accounted for. When you make a contribution to a pension fund, whether privately or through your employer, your contribution is deducted from your gross income before it is taxed. Therefore, you effectively save at your higher rate of tax and are able to deposit that full amount into your pension fund.
Another often overlooked advantage is both PAYE workers and the Self Employed can make pension lump sum contributions up to the 31st of October in the year following the contribution year. The amount of tax back you can receive on pension contributions increases as you get older, and all pension tax relief is subject to an earnings maximum, which is currently set at €115,000. This means that regardless of age, only contributions deducted from the first €115,000 of your annual salary are eligible for tax relief.
Additional factors may apply to individuals with multiple income streams, those who contribute to multiple pension funds and people in particular professions which may have a younger standard retirement age.
If you are unsure whether you are due tax back on your pension then it is best to seek advice from your tax or pension advisor.
This article by David Moran appeared in Tralee Outlook on 19th October 2017