Employee's pension contributions

Types of pension contributions

Ordinary contributions

Your employee's ordinary contribution to a Revenue-approved retirement plan can be deducted from their gross pay when calculating their tax.

You should not deduct these contributions from your employee’s gross pay when you are calculating the following:

Special contributions

Your employee may receive tax credits for any special contributions that they make such as one off payments. These will be included in their Tax Credit Certificate (TCC). These contributions should not be deducted from their gross pay when calculating their tax, USC and PRSI.

Additional Voluntary Contributions (AVCs)

Employees who are members of occupational pension schemes may choose to make AVCs from their pay.

Where appropriate, you may grant tax relief under the net pay arrangement.

You should not deduct AVCs from your employee's gross pay when you are calculating their USC and PRSI.

Aggregated contributions

Limits for tax relief apply to the combined amount paid by your employee to all:

  • Occupational pension schemes
  • Retirement Annuity Contracts (RACs)
  • Personal Retirement Savings Accounts (PRSAs)
  • and
  • Pan-European Personal Pension Products (PEPPs).

Termination payments

If you make a termination payment to your employee, you may have to deduct tax from a portion of this payment. This portion should not be included in their pay when calculating the limit for relief for pension contributions.

For further information on termination, payments please see Lump sum payments.

Refund of employee pension contributions

For information on how to refund your employee's pension contributions, please see Items not treated as pay.

Next: Personal Retirement Savings Account (PRSA)