Generally, employees fall into three categories:
- Private sector, but not included in an employer’s occupational pension scheme
- Private Sector, included in an employer’s occupational pension scheme
- Public sector, included in the public service superannuation scheme
Employees will pay income tax under PAYE Schedule E. Private sector employees will pay PRSI class A along with public sector workers recruited after 6th April 1995 as this PRSI class builds up an entitlement to Contributory State Pension. We encourage you to request a copy of your PRSI contributions record.
Employees not enrolled in an occupational pension scheme
Employees who are not included in an employers occupational pension scheme have a number of options to plan for their retirement:
- Where an employer does not operate or they are not including the certain employees in the pension scheme, the employer must facilitate any employees through a net payroll deduction from salary under employment law.
- Where an employee does not have the option of joining their employers pension scheme for whatever reason, their options to make pension contributions are:
- Through the employers nominated PRSA Provider, or
- contribute to a Personal Pension or PRSA of their own choice.
Employees enrolled in an occupational pension scheme.
Where an employee is enrolled in their employers occupational pension scheme, there are a number of benefits:
- Employers Contribution, which does not attract BIK for income tax, PRSI or USC
- Two options for your Tax free lump sum entitlement
- Death in Service benefits, some employers may provide death in service, illness and sick pay benefits as part of the scheme but not in all cases.
- ability for Additional Voluntary Contributions (AVCs) through payroll
Some occupational pension schemes allow employees / members to vary their contributions within certain limits, however it is advisable to contribute at a level that attracts the maximum level of employers contribution as the payment of the employer is not a BIK for income tax, PRSI or USC.
Employees / members of occupational pension schemes can pay additional voluntary contributions through the main scheme itself or through a separate AVC PRSA with another provider.
Employees / members of occupational pension schemes should receive annual benefit statements no later than 9 months after the scheme year end.