Everything you need to know about pensions in Ireland but were afraid do ask

This pension resource page comes from our friends at Moneycube.ie Moneycube.ie provides online advice to help people in Ireland take charge of their investments and pensions.

What’s a pension?

A pension is simply a saving fund with your name on it, used to pay for your retirement. Usually, you can’t access your fund until at least the age of 60, although with a little work it’s often possible to bring this forward to age 50 – a key consideration if you’re pursuing FIRE.

Your money is invested on your behalf by a pension company.

Typically a pension provider will invest your pension into company shares, bonds and property through an investment fund, in order to generate long-term growth.


Do I need a pension?

Yes. Many people’s retirement plans involve several sources of income, including the State pension, pensions from work, other savings and investments, and personal pensions.

At around €12,900 per year, the State pension is there to provide a basic minimum income. If you’re looking for more than that in retirement, you’ll need to contribute to a pension. And if you don’t have a pension through your job, it’s especially important to consider how you will fund your retirement.

What’s more, if you’re paying income tax in Ireland but not paying into a pension, it’s likely you’re leaving a substantial amount of tax dollars on the table.

Types of pension

There are three main types of pension in Ireland: the State pension, pensions provided through your work, and pensions you arrange yourself – also known as personal pensions.

Personal pensions come with lots of different names, as you’ll see in our jargon buster here – https://moneycube.ie/start-a-pension/types-of-pension/

It pays to put money in a pension

Because the government want us to save as much as possible for retirement, there are substantial tax benefits to saving into a pension. 

These can be grouped into three categories:

  • Firstly, you get income tax relief on the money you put in. You can typically receive tax relief at your highest rate of income tax on your contributions.

If you’re a standard-rate taxpayer, that means every €100 of net pay you contribute will deliver €125 into your pension pot.  If you’re a higher-rate taxpayer, a contribution of €100 from net pay is worth €167 in your pension.

If you’re a 40% rate taxpayer, for every €60 of after-tax pay you put in, the taxman adds €40. (That’s the €40 you’d normally be paying in tax on €100 of earnings). That’s a guaranteed growth rate of 67% – an investment return that cannot be beaten elsewhere. If your top rate of tax is 20%, then for every €80 of after-tax pay you put in, the taxman adds €20.

Revenue impose two limits on the relief you can claim.

Firstly, depending on your age, you can claim tax relief on different percentages of your income to a pension (it gets more generous as you grow older).

Secondly, the maximum amount of your pay that is taken into account for calculating tax relief is €115,000 per year.

The limits on the tax relief you can claim are as follows:


Percentage of your income

Max € you can land in your pension each year

Under 30















60 or over



  • Secondly, once it’s in a pension, investment growth on the money in your pot accumulates tax-free. There’s no income tax, capital gains tax, deposit interest retention tax or capital gains tax on your money while it works away on your behalf. That’s a lot of tax to avoid!
  • Lastly, most people can take a lump sum of up to 25% of their pension pot when they retire. Pension pots are capped overall at €2 million in Ireland.  So your maximum lump sum can be as much as €500,000. What’s more, the first €200,000 of your lump sum is paid tax-free.  It’s probably the only time in your life you’ll collect anything close to that amount without the taxman having a piece. The remaining amount of your lump sum is taxed at the standard rate of tax, 20%. For higher-rate income taxpayers, this represents a major saving compared to the 40% rate on most income. 

When should I start?

Although it’s almost never too late to start a pension, the earlier you begin paying into a pension, the better.

You’ll get the benefit of investment compounding and tax relief over a period of many years, meaning your investments do the heavy lifting for you, and you ultimately need to contribute less. In fact, a contribution of €200 per month when you’re 30 can have the same impact as around €900 per month when you’re 50.

You can read more about starting a pension here. https://moneycube.ie/start-a-pension/

Types of pension

There are several kinds of pensions in Ireland. We’ve outlined the four main structures: occupational pensions, PRSAs, personal pensions, and personal retirement bonds.

There’s money to be won and lost by using the right kind of pension for your situation: we’d recommend getting advice on what’s right for your situation.

Occupational pensions

An occupational pension is a pension plan provided by a business for its employees. The employer must make a contribution to the plan, and of course employees can also contribute as well.

Occupational pensions are normally set up in trust for employees. The pension scheme trustees are responsible for the good governance of the pension plan. In the past, management did much of this work directly, but increasingly this is handled by specialist trustees, significantly easing the burden and risk to employers.

An occupational pension is a defined contribution plan. That means that while the amount of money paid in is clear, the value of the pension can go up as well as down, and is not guaranteed.

A key advantage of occupational pensions is that the employer can contribute to them very generously, over and above the age-related limits for contributions from income.

If you’re on the FIRE journey, you may have started your own company and building an occupational pension with substantial employer contributions can be a major route to accelerating your retirement date.


A Personal Retirement Savings Account, or PRSA, is also a defined contribution plan. However, in this case, each employee directly owns their own pension plan, and the employer’s main role is to facilitate access to the PRSA, and enable contributions through payroll. The employer is not required to contribute to a PRSA pension plan.

PRSAs come in two flavours: standard, and non-standard. The charges on standard PRSAs are capped, and they can only be invested in investment funds. Non-standard PRSAs can invest in a wider choice of assets, and the charges are not capped.

Personal pensions

This is a pension which is held in your own name, independently from your job.  Your employer can’t contribute to this pension, so it’s often the right choice for self-employed people, or people who aren’t offered a pension through their work. As they’re regulated differently from PRSAs, they can be cheaper.

Personal retirement bond

This is a pension set up to hold a pension you’re taking with you when you leave a job.  Instead of the pension remaining with your old employer, you manage it directly with the provider of your buyout bond. 

Personal Retirement Bonds have three big advantages for FIRE followers:

  1. Control and transparency: PRBs offer control over investment and charges, including the ability to put your money into low-cost index funds.
  2. Access: unlike most pensions in Ireland, a PRB can be accessed from age 50.  If you have already build up substantial funds to retire early, or you have good use for a lump sum (who doesn’t?) then this is highly attractive.
  3. Flexibility: by keeping pensions from your old jobs separate from your new one, you increase your options for income in retirement.  For example, you could access one pension pot at age 50, another (say your main pension fund) five years later, and so on.

Three key questions to focus on for your pension as part of FIRE

  1. Have you maximised your contributions this year and last, based on the age-related limits?
  2. Have you got a holistic pension investment strategy, connected to when you expect to draw down each pension?
  3. Have you pensions from old jobs which should be sharpened up?

Moneycube.ie provides online advice to help people in Ireland take charge of their investments and pensions.

Next, for post-tax Investing check out Quick Guide To DEGIRO | FIRE Dave