Under a pension scheme for a Company Director, all the usual pension tax advantages would apply:
- Director can make personal contributions and receive income tax relief at their usual rate
- All investment growth is applied tax-free
- At retirement entitled to a tax-free lump sum of at least 25% of the total fund value
Company Directors have a unique advantage when it comes to funding for retirement. In addition to the tax benefits above, the following benefits also apply:
- Not restricted to age-related contribution limits like employees and the self-employed
- Pension contributions can be paid for by the company
- Pension contributions are tax-deductible expenses
- No benefit-in-kind implication for director
- No impact on director’s personal contribution tax relief
- Most tax-efficient way of moving company profits to personal wealth
Example:
John, company director age 45 on a salary of €60,000.
He hopes to retire at age 68 and he’s married and has no pension in place.
He considered starting a Personal Pension but his Financial Advisor recommended an Executive Pension instead, with contributions paid for by the company.
|
Company Funding |
Not allowable |
Max allowable €45,888 p/a |
|
Personal Funding |
Max allowable €15,000 p/a |
Max allowable €15,000 p/a |
By proceeding with a company pension, John can invest over €45,000 per year in his pension without using his salary, with zero benefit-in-kind or tax implications.
This €45,000 contribution is a tax-deductible expense for the company.