Tax relief on pensions
Introduction
If you are a member of an approved pension scheme, you can get income tax relief on your contributions to the scheme.
You pay tax on the pension when it is paid to you. For more information on the way pension income is taxed see our page on taxation of pensions.
The rate of tax relief on your pension contributions is at the highest rate of income tax you pay, known as the marginal rate.
There are various rules that pension schemes must meet to get the tax relief and there is a limit to the amount of the relief.
There is no relief on PRSI or the Universal Social Charge for employee pension contributions.
Tax relief on pension contributions
When you pay into your pension, your pension contributions get income tax relief at the marginal rate.
You do not get relief on the Universal Social Charge (USC) or Pay Related Social Insurance (PRSI).
Limits on tax relief
There is a limit to the amount of pension contributions you can get tax relief on in any one year.
There is also a limit to the total value of your pension fund that gets tax relief.
Annual limit
The annual limit is a percentage of your income. The percentage depends on your age.
| Age | Limit |
| Under 30 | 15% |
| 30–39 | 20% |
| 40–49 | 25% |
| 50–54 | 30% |
| 55–59 | 35% |
| 60 or over | 40% |
€115,000 is the maximum income that can be used to calculate the percentage.
For employees, income means gross pay (pay before deductions). If you are self-employed, income means earnings less allowable expenses, also known as net relevant earnings.
If you are a professional sportsperson or in a profession that usually retires at an earlier age than the norm, you can get tax relief on 30% of your net relevant earnings regardless of your age.
If you have more than one source of income, the relief is only on the source of income that contributions are made from.
Limit on total value of fund
There is a limit on the overall value of your pension fund that you can get tax relief on. This is called the Standard Fund Threshold. The Standard Fund Threshold is €2 million. (A higher limit may apply if the fund was over €2 million on 1 January 2014, this is called a Personal Fund Threshold (pdf)).
If the fund is greater than the limit, tax at 40% will be charged on the excess when you become entitled to receive it.
Tax relief on lump sums at retirement
When you retire, you can usually take part of your pension fund as a tax-free lump sum. The amount you can take depends on the type of pension plan you have and how much you have taken in tax-free lump sums from other pension plans.
There is a limit of €200,000 on the total amount of tax-free retirement lump sums you can get. Lump sum payments are taxed as follows:
| Amount of lump sum | Income tax rate |
| Up to €200,000 | 0% |
| €200,000–€500,000 | 20% |
| Over €500,000 | Marginal rate |
There may be a limit to how much you can take out of your pension, depending on the type of pension.
How to apply
Usually your employer deducts the contributions directly from your pay and will give you the tax relief due.
If your employer does not deduct the contributions, you can use myAccount to complete and file an income tax return.
If you’re self-employed, you can apply for tax relief on contributions by using the Revenue Online Service (ROS).
Revenue has a video explaining how to claim tax relief for pension contributions.