This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Attention all company owners /directors! There are strong indications that the upcoming budget/ finance acts may introduce significant restrictions on capping limits for employer contributions to pensions, particularly targeting employer contributions to Personal Retirement Savings Accounts (PRSAs).
Current PRSA Rules:
As of now, company directors can contribute up to €2 million to a employee PRSA in a single year without incurring any BIK tax for the individual together with Corporation tax saving. This provision, effective since January 1st, 2023, also allows firms to reduce their corporation tax bills while funding personal pensions. However, Revenue has raised concerns about these rules, sparking discussions on whether such contributions should be taxed as a Benefit-in-Kind (BIK). At present no BIK is applicable.
Why the BIK Exemption Matters:
Boosting Retirement Savings: The BIK exemption incentivises contributions to PRSAs, encouraging both employers and employees to focus on long-term retirement savings.
Reducing Future Dependency: The government aims to lessen the future financial burden on state pensions by encouraging private savings now.
Simplified Administration: Excluding PRSA contributions from BIK taxation reduces administrative complexity for employers, making it easier for companies to offer these benefits.
What Should You Do Now?
With the budget scheduled for 1st October 2024, there is a limited window of opportunity to take advantage of the current regulations. If you are considering increasing your PRSA contributions or if your employer makes such contributions, now is the time to act.
Future changes could impact the existing tax benefits, so it is crucial to maximise your contributions under the current rules.
Don’t wait! To learn how you can optimise your pension before potential changes come into effect, book a Free Consultation today. Our experts are here to help you make the most of your pension contributions.