I’m a big believer in saving for retirement. And I don’t just mean that I’d like to be able to retire someday—I actually want to save money now so that I can enjoy my golden years! But, as you probably know, the amount that you’re allowed to contribute each year to your pension scheme is limited by law. In Ireland this limit is set at €400 per month (or €4,800 per year). If you’re contributing less than this amount, then there are several ways you could be maximizing your pension contribution and boosting your savings:
Find out what you can contribute and how much you’re entitled to.
The first thing you need to do is find out what you can contribute and how much your employer is contributing. You’ll need this information in order to calculate how much tax relief is available for your pension contributions. You can get this from the Pensions Authority or from their website
You also need to know how much money has been paid into other pension schemes, such as a defined benefit scheme or an occupational scheme (such as a company pension plan). This will help determine whether or not there are any restrictions on your ability to make additional voluntary contributions (AVCs) into another type of retirement fund such as an Aviva Retirement Savings Account (ARS).
Consider your age.
As you approach retirement, it’s important to consider how much time you have left until then. If your retirement is a long way off and you have plenty of time on your side, then taking advantage of pension contributions may not be as urgent. However, if retirement is fast approaching and/or if you’re older than 65 (the age at which most people begin drawing their state pensions), then maximizing your contributions now will help ensure that enough money is available for later in life.
Consider your marital status and family circumstances.
In Ireland, you can lower your taxable income by claiming a personal tax credit. This is not available to everyone and the amount of it depends on your marital status and family circumstances.
To calculate your personal tax credit:
- Complete the “Marital Status” section on page 2 of Form 12 (or Form 12A). If you’re married or in a civil partnership, include all non-dependent children living at home with their parents as well as any other dependents who are not being claimed for exemption by someone else in their own right (for example, older children). You must also include yourself on this page; don’t forget!
- Add together all income from employment or self-employment that isn’t subject to special rules such as PAYE salaries, pensions etcetera; then subtract any allowable deductions such as mortgage interest payments made during 2018 – these can come off straightaway provided they were paid during 2020 regardless of when they were incurred during 2019/2022 etcetera so long as they relate directly back towards maintaining property ownership rather than personal enjoyment like holidays overseas etcetera…
Check if you can contribute to more than one pension scheme during the year.
It’s important to note that you can contribute to more than one pension scheme during the year. However, this does not mean that contributions should be made from different schemes at the same time.
For example, if you have an employer sponsored pension plan and a personal or solo 401(k) account, it is best not to make withdrawals from one while making contributions into another. This will cause confusion when trying to reconcile your taxes at tax time as well as having an unfavorable impact on the amount of tax relief available for your Irish income tax return (ITR).
Check if you might be eligible for a tax credit or deduction in Ireland.
If you are living in Ireland, then there are some tax credits and deductions that may be available to you. These are great ways to save money on taxes by reducing the amount of tax that is due.
A tax credit is a reduction in the amount of income tax due, whereas a deduction reduces the amount of taxable income before calculating how much tax is owed.
The benefit of both these options is that they reduce the amount of money paid out by your employer or student loan provider on behalf of employees and students respectively who earn less than $50,000 per year ($60,000 for married couples).
Check if you’re eligible for contributions from an employer match or workshare option.
If you’re not sure whether or not your employer offers a matching or workshare pension contribution, check with your Human Resources department. If they do, it’s worth asking if they match the employee contributions and how much they’ll match.
Employer contributions may be paid as a lump sum or in installments throughout the year. They may also be higher than the employee’s average monthly contribution rate to ensure that their employees are saving enough money for retirement later on down the line (and there’s no better motivation than knowing someone else is watching out for your future!).
Conclusion
We hope this has helped you to understand how to maximize your pension Ireland contributions in Ireland. The most important thing is to know that you can save more money for retirement, so it’s worth checking with your HR department about pension contributions in Ireland!