Pension contributions in Ireland receive tax relief at your marginal rate (up to 40%), making them one of the most tax-efficient ways to build wealth. The amount you can contribute depends on your age and earnings.
| Age | Max % of Net Relevant Earnings |
|---|---|
| Under 30 | 15% |
| 30 to 39 | 20% |
| 40 to 49 | 25% |
| 50 to 54 | 30% |
| 55 to 59 | 35% |
| 60 and over | 40% |
The annual earnings cap for relief purposes is EUR 115,000. So a 45-year-old earning EUR 120,000 can get relief on contributions up to EUR 28,750 (25% of EUR 115,000).
Employee contributions are deducted from gross pay before income tax is calculated, giving relief at your marginal rate. A 40% taxpayer contributing EUR 1,000 saves EUR 400 in income tax. However, USC and PRSI are still payable on the gross amount.
There is no percentage limit on employer pension contributions. The company receives a corporation tax deduction, and the contribution is not treated as BIK for the employee, provided it is "wholly and exclusively" for the trade.
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Get Your Review - EUR 49Employee pension contributions are deducted from your gross pay before income tax is calculated, effectively giving you relief at your marginal rate. A 40% taxpayer contributing EUR 1,000 saves EUR 400 in income tax immediately. However, USC and PRSI are still calculated on the gross amount, so the effective relief is not quite 40%.
Employer contributions receive a corporation tax deduction for the company and are not treated as BIK for the employee. There is no percentage limit on employer contributions, making them an extremely tax-efficient form of remuneration for company directors.
At retirement (from age 60, or 50 in certain circumstances), you can typically take 25% of the fund as a tax-free lump sum, up to EUR 200,000. The next EUR 300,000 is taxed at 20%. Any excess above EUR 500,000 is taxed at your marginal rate. The remainder of the fund goes into an Approved Retirement Fund (ARF) or is used to buy an annuity.
If you have unused relief from prior years (because you contributed less than the maximum), you can make additional voluntary contributions (AVCs). AVCs can be made up to the filing deadline for the relevant tax year. This is a powerful strategy for catching up on pension funding, especially for those in their 50s and 60s who have higher age-related limits.
Disclaimer: This information reflects the 2026 tax year. Tax rules change annually following the Budget. Check Revenue.ie for the latest rates and thresholds. This guide is for informational purposes only and does not constitute tax advice.