Redundancy or pension contribution

DI Dwyer

Is an employer allowed to make a lump sum contribution to your pension pot instead of paying a redundance package, where the redundancy would be taxable

homer911

DI Dwyer wrote: »

Is an employer allowed to make a lump sum contribution to your pension pot instead of paying a redundance package, where the redundancy would be taxable

Not an expert but I imagine that once they meet the minimum legal redundancy requirements, everything else is a bonus

Normally these things are negotiated with workforce representatives

DI Dwyer

Thanks for reply Homer, However it's more a question of what is allowed under pension rules/law that I'm interested in.

Kennie1

No, your employer has to pay you your redundancy payment directly to you and cannot pay the min legal redundancy payment into a penison. However as Homer said previously once the min has been paid your employer can pay a lumpsum into your penison subject to revenue maximium limits however an employer would not normally do this as they would not get extra tax relief under redundancy payments tax law on pension contributions. You can pay part of your redundancy payment into your pension subject to employee revenue limits as well and you can backdate this payment to 2010 before you leave your employment through an AVC (i assume you are in a occ pension) and make another payment again for this tax year.

Revenue Pension Contribution Limits for employees are as follows (please note that employer max limits for employees are different)

Under 30 15% of total taxable income
30 to 39 20%
40 to 49 25%
50 to 54 30%
55 to 59 35%
60 to NRA 40%

You need to include your own contribution in to the main scheme as well.

DI Dwyer

Excellent Kennie, that answers it for me. Many thanks