New PRSA Employer Limits
Please remember, with effect from 1st January 2025, Employer paid PRSA contributions have been reduced and are now limited to 100% of the employee’s remuneration. The limit will generally be based on the salary received by the employee up to the point the employer PRSA contribution is made.
Any Employer PRSA contribution over the limit will not get tax relief and will result in a BIK liability for the Employee.
What to Watch Out For
- Where an Employer regular (monthly) contribution is greater than the monthly salary. These contributions will have to be reduced or moved to a company pension.
This might have happened where the PRSA was set up in the last 2 years, when it was allowable for the employer contribution to exceed salary: - Employer single premiums to PRSAs – any single premium should not exceed declared salary (mindful also of any ongoing monthly premium at date of payment).
The new rules are separate and distinct from any additional employee contribution – remembering employee contributions are based on a lesser percentage of salary that increases with age to a maximum of 40%.
PRSA limits were changed back in 2023, but have since reduced and the new rules are effective from January 2025. If you are in doubt or have any questions, give us a call and we can point you in the right direction.