Page 27 - Group Insurance and Retirement Benefit IC 83 E- Book

If you are considering asking for a transfer payment, you should obtain detailed

information on what it is likely to buy for you in the new scheme before you ask for the
money to be transferred. If the transfer value will not replace all of your service, you may

be able to make up some or all of the difference by making Additional Voluntary
Contributions (AVCs).

How are my personal contributions calculated?

The rules of your scheme will contain a formula, normally expressing your contributions

as a percentage of pensionable salary. If your scheme is ―integrated‖ with social welfare,
you may have a pensionable salary that is lower than your actual salary. If your

pensionable salary is calculated by subtracting from your basic salary in order to

calculate your pay for pension purposes, the contribution you pay would be based on the
adjusted figure. Sometimes earnings other than basic pay may be counted for pension

purposes. Only the detailed rules of your own scheme will provide an accurate answer to
this question.

Is there tax relief on contributions?

Yes. Contributions which you make, including additional voluntary contributions, up to

maximum limits that vary with age, from 15% to 30% of your gross earnings, will
receive income tax relief. Earnings ―cap‖ of €254,000 applies to contributions by

employees. The relief will be given at your marginal rate of tax. Since contributions are
normally deducted from your pay before tax is calculated, you will also receive relief

from PRSI on these contributions.
However, the maximum allowable contribution by you is subject to the condition that the

employer must have paid a substantial contribution to the total cost of your benefits. In

other words, tax relief would not be available on a defined benefits scheme which was
funded solely by contributions from members. Since the Finance Act of 2003,

contributions to all forms of pension provision – occupational pensions, PRSAs and

Retirement Annuities or ―personal pensions‖ are added together in computing the
contribution limits and the earnings cap.