Increasing Employer Pension Contribution

Chill10

Hi,
My wife has never really made meaningful pension contributions up to 3 years ago.  She is about 12 years from retirement (hopefully).  Currently she is in an occupational DC pension were she contributes 3% of salary and her employer 5%.  She also made and additional 22% AVC contribution this year.  My question is, if her employer is willing, could her employer increase their contribution to the DC occupational scheme?  For example, instead of 3%, contribute 20% - which naturally would be taken from her gross pay and she would take home less.  If the employer is willing, can this be done?  are there any limits?  Is there any financial benefit to the employer?  For example lower tax or PRSI.

Many thanks if someone out there can help.

coylemj

The employer may be constrained in giving one employee special treatment. This has been asked before and it's not 100% clear if it can be done for one employee.

On the broader issue, you say your wife contributed 22% to the AVC this year on top of the 3% she pays through salary deduction. Did she make any AVC contributions last year (2016)? If not, up to Oct 31st next she can still make a lump sum AVC contribution in respect of 2016 so if she did not use up her full tax-free allowance last year, she has two months in which to do so.

What you do is write a cheque to the AVC fund, tell them that the contribution is in respect of the 2016 tax year and that you want a receipt. You then submit this with your tax return for 2016 and the tax man will give you full relief.

She may be able to go higher than 25% and still get relief if she is in her 50s, you said she is 12 years off retirement. Below are the age-related limits for employee contributions....

• under 30: 15%
• 30-39: 20%
• 40-49: 25%
• 50-54: 30%
• 55-59: 35%
• 60 or over: 40%

Chill10

Hi, thank you for your quick reply. Yes, she is maxing out the AVC option. I guess my question boils down to - is there any regulatory reason that her employer cannot increase their contribution? Does pension regulation apply any cap? Thanks!

Henry Ford III

Only a maximum funding one which she'll never reach.