Is it worthwhile making Pension Contributions?
This is one of the best ways of receiving significant tax relief while investing for your future. There are now a great variety of pension investment structures that provide a lot more choice and control over your pension fund. Generally speaking, employees will be involved in a company pension scheme. If your employer does not provide one you can set up your own pension fund.
You should always seek independent professional advice in this area before committing yourself to paying into a pension fund to ensure it will meet with your requirements.
We recommend that individuals make provision for their pension contributions on an ongoing basis, as it can be difficult to source the required lump sum payment on a once a year basis. Where monthly contributions are being made individuals in nonpensionable employment can arrange to get the benefit of the tax relief through their tax credit certificate. This means their income will be reduced for tax purposes through the PAYE system and they will benefit immediately from the tax relief due on the pension contribution.
For self-employed individuals, they will be able to factor in their monthly payments as a deduction when calculating their normal preliminary tax payment on account.
We can provide more detailed advice on the potential tax benefits for you by way of consultation for which an extra charge would arise.
The earlier you start funding your pension the better. You are missing out on valuable tax relief when you are not making contributions to a pension fund.
If you are self-employed and relying on the state pension you should ensure that you make voluntary contributions for any tax year for which you incur a loss as otherwise you will not have paid any PRSI for the year. Voluntary contributions are paid separately from your tax payments and must be organised through the Social Welfare section that delas with voluntary contibutions. There is a certain minimum number of PRSI contributions to be made in order to qualify for the full state pension.