Tax Relief
Tax relief on contributions: The maximum contribution that is allowable by Revenue for tax relief purposes, given your age, is [max_percent]% of your current salary. Revenue has set a limit for determining maximum salary for pension contribution purposes at €115,000 for 2022. Contributions made in excess of these limits may not receive tax relief.
Tax-free lump sum from your pension
Revenue currently allows individuals to take a lump sum from their pension on retirement subject to Revenue limits. This will be funded by reducing your annual pension.
Based on your salary details it is estimated that you should be able to take a retirement lump sum of €[tax_free_cash]. For the purposes of the retirement lump sum calculation, it is assumed that you have completed 20 years company service at retirement and are eligible to take up to 1.5 times your salary as a retirement lump sum. This calculator makes no allowance for the provision of lump sums.
An alternative option that may be open to you at retirement is to take 25% of your fund as a retirement lump sum and invest the remainder in an Approved Retirement Fund (ARF) . The tax-free element of your retirement lump sum option is subject to the limits imposed by Revenue.
A maximum of €200,000 of any lump sum is currently tax-free. Lump sums between €200,001 and €500,000 are taxed at 20%, with any balance over €500,000 being taxed at the marginal rate and subject to the Universal Social Charge.
Maximum Pension Benefits
Individuals have a maximum lifetime limit on the amount of their retirement benefits from all sources (except the State pension). The limit, known as the Standard Fund Threshold (SFT), is currently (2022) €2m. If the capital value of pension benefits drawn down by an individual exceeds his/her SFT or Personal Fund Threshold as appropriate, a tax charge of 40% is applied to the excess fund.
Contributions or benefits may exceed limits prescribed by the Revenue. Your financial advisor will be able to help you to stay within your limits.
