Important News: The Finance Bill 2024 and Implications for Your Pension

The Finance Bill was released yesterday, October 10th. This bill is designed to implement the Budget changes announced on October 1st. However, it also includes some specific amendments to the tax code. Notably, there are significant updates to the Pension Legislation concerning PRSAs (Personal Retirement Savings Accounts).

In January 2023, a change was made to PRSAs, allowing employers (including your Personal Limited company) to contribute to pensions without any upper limits. This led to strategic pension planning by some taxpayers and business owners. In response to concerns raised by the Revenue Commissioners, the Department of Finance has now introduced new measures.

What are the Proposed Changes for PRSAs in the Finance Bill?

A new cap will be introduced on employer contributions to a Director’s or Employee’s PRSA. This limit will be set at 100% of the Director’s or Employee’s total taxable income. Any company contributions exceeding this limit will not qualify as a tax deduction and will result in a Benefit-in-Kind (BIK) for the Director or Employee.

Who Will Be Affected?

These changes will impact individuals with a PRSA who are making substantial pension contributions that exceed their taxable income.

Can I Make a Contribution Now?

Yes, you can still make a large contribution before the Finance Bill is enacted, adhering to the current rules.

Do These Changes Affect Executive Pensions?

As of now, these rules do not seem to apply to Executive Pensions, although the contribution limits for these types of pensions are different.

We recommend speaking with your pension advisor about these changes. Your account manager at Icon Accounting can assist you in making a one-time contribution from your Limited company and guide you through the process.

If you don’t already have a pension advisor, we suggest contacting our partner, Rockwell, who can facilitate a quick payment into your PRSA. Please reach out to your Icon Accounting account manager for an introduction to Rockwell.