Pensions and taxes are on the bottom of the average persons ‘life admin’ list. We don’t know that for a fact, but ask anyone and they will confirm that other than Budget 2022 announcements, most of us avoid the two topics.

However, what if there was a benefit to discussing pensions and taxes once a year? (The benefits are numerous at any time of year, but particularly in October).

How are pensions, tax and October related? The answer is straightforward:

Making contributions to a pension plan could be the answer to reducing your tax bill. Making a contribution to a pension plan before the 31st October each year allows you to claim tax relief for the previous year.

Important Deadlines

October 31st (or 17th November 2021 if you use the Revenue Online Services (ROS) to pay your tax bill), is the final date on which you can claim tax relief on backdated pension contributions. In other words, this is the last chance to get some money back from the tax man for 2020. (Cheques must be received by October 29th)

If you are a PAYE employee and you save a lump sum Additional Voluntary Contribution (AVC) by cheque/Direct Debit and claim tax relief on this AVC by 31st October you can get tax relief in respect of the previous calendar year.


Additional Voluntary Contribution paid 25 October 2021:       €2,000

Reduction in 2020 tax bill (40% tax payer):                                 € 800

Actual cost to you of additional €2,000 into your pension:      €1,200

Self-employed people can also claim back some tax:

Let’s say you have a bill of €10,000 for 2020 and preliminary tax of €10,000 for 2021 to pay by 31st October 2021. You could pay Revenue the €20,000 and this job is done for another year or you could make a payment of €5,000 to your pension. This will have the effect of reducing last year’s tax bill by 40% of that €5,000 (i.e. €2000). As preliminary tax for 2020 is 100% of last year’s bill, you also reduce the preliminary tax by the same amount (i.e. €2,000).

Where would you like to see your money going?

You could pay Revenue €20,000 or you could put €5,000 in your pension and pay Revenue €16,000 (i.e. €20,000 – €2,000 – €2,000). Your total spend is only €1,000 more but for that extra €1,000, you pay Revenue the amount due and also have €5,000 in your pension fund –you are ahead now and setting yourself up for retirement!

The following table shows the percentage of your income that you can get tax relief on when contributing to a pension plan, depending on your age and subject to a current maximum annual earnings amount of €115,000p.a.

Saving for your retirement is tax efficient

As well as tax relief, the funds in which your contributions are invested currently benefit from tax-free growth, unlike most saving methods which may be liable for DIRT Tax or Capital Gains Tax. This means pension funds benefit from being able to reinvest the non-taxed returns to generate higher future returns and should build up quicker than a fund that has to pay tax on its investment returns.

In addition, when you retire, you can take part of your pension fund as a tax-free lump sum. The amount you can take depends on the type of pension plan you have in place. It is important to remember that your regular pension income or Approved Retirement Fund ARF may be subject to tax.

Planning for the Future

As in life, there are many variables and changes. Planning for retirement and protecting your financial future involves forming expectations about income and expenses over the rest of your life, based on present assumptions. As the pension administrator for pension schemes in the construction industry, we have a range of solutions to help you prepare and protect your future investments. Whether you are self-employed, running a large company with multiple staff requirements, looking for life and income protection, we can help.

For more information and to find the right solution for you, contact our team for a no obligation discussion. Our team of financial specialists will put you in touch with the right team member. No obligations, no hidden fees, no jargon – just a straight forward chat to help you secure your present and your future.

Contact us via email ( or by phone (01) 223 4949