Irish pension funding rules: what contractors need to know in 2026

Guidance checked: 6 October 2026.

Irish pension funding rules have changed since this article was first published in May 2024. For contractors and company directors, the key update is that employer contributions to a Personal Retirement Savings Account (PRSA) are now subject to a salary-based limit for benefit-in-kind purposes. The Standard Fund Threshold has also changed.

A PRSA can still form part of a retirement plan, but the earlier position should not be used to calculate a company contribution today. This guide explains the main changes and the questions to discuss with your pension adviser and accountant.

What changed in Irish pension funding rules?

Finance Act 2022 removed the benefit-in-kind (BIK) charge on employer PRSA contributions from 1 January 2023. Employer contributions were also separated from employee contributions for personal tax-relief calculations. That was the context for the original 2024 article.

From 1 January 2025, a new employer limit applies. The previous statement that a company could contribute without salary constraints no longer describes the current tax treatment. Revenue explains the distinction in Pensions Manual Chapter 24.

How does the employer PRSA limit work?

Revenue’s current guidance states that, from 1 January 2025, the employer limit for contributions to an employee’s PRSA or PEPP is 100% of the employee’s salary. Contributions above that limit result in a BIK charge to the employee.

This is a limit on the amount that can receive that tax treatment, rather than an absolute prohibition on making a larger contribution. It is also not a recommended contribution amount. Your accountant should confirm the relevant pay figure and payroll treatment before the company makes a payment.

Revenue’s detailed manual defines the employer limit by reference to the employee’s emoluments for the year of assessment. It also sets out how special circumstances, including certain unpaid-leave situations, affect the calculation. Company tax deductibility is subject to the employer limit too: excess contributions are not deductible from the employer’s taxable income.

Are personal contributions treated differently?

Yes. A payment made personally and a payment made by your company should be identified separately. Tax relief on employee pension contributions is subject to an age-related percentage limit and an earnings limit. Revenue currently caps the earnings taken into account for that calculation at €115,000 a year.

These personal-relief rules should not be confused with the employer PRSA limit. Your age, relevant income and contributions to other arrangements can affect your personal calculation. Use Revenue’s tax-relief limits as background, then ask your adviser and accountant to confirm the position for your circumstances.

What is the Standard Fund Threshold in 2026?

The Standard Fund Threshold is €2.2 million for 2026, replacing the €2 million figure that applied from 2014 to 2025. It is a separate consideration from the annual employer-contribution limit. Pension benefits above the applicable threshold can give rise to chargeable excess tax.

For someone with substantial existing pension benefits, reviewing the full pension position matters before adding further funding. Ask your adviser to assess the benefits across your arrangements and the threshold that applies to you. Revenue’s chargeable excess tax guidance explains the current thresholds.

What should contractors review before contributing?

A PRSA is a personal pension product that can receive contributions from you and your employer and is not tied to a single employment. That flexibility does not make it the preferred option for every contractor or director. Revenue’s PRSA overview provides a starting point.

Before committing funds, bring the following to your review:

• Your payroll details and proposed employer contribution.
• A separate record of any personal pension contributions.
• Current statements for every existing pension.
• The proposed arrangement’s charges, investment choices and retirement terms.
• A company cash-flow forecast and your retirement goals.

Ask your accountant to confirm the contribution’s tax treatment and timing, and your adviser to assess the arrangement’s suitability. Our guide to pension contributions through a limited company covers the wider planning questions.

C Plus Financial’s retirement planning service supports professional contractors with pension reviews. Book a consultation to discuss your circumstances with an adviser.

Important information

This article provides general information only and does not constitute personal financial, investment or tax advice. Product suitability, tax treatment and entitlements depend on individual circumstances and may change. Speak to an appropriately qualified adviser before taking action.

Sources

• Revenue, Pensions Manual Chapter 24, updated May 2025.
• Revenue, Pension contributions, published 10 September 2026.
• Revenue, Tax relief limits on pension contributions, published 22 October 2025.
• Revenue, Chargeable excess tax, published 2 September 2026.
• Revenue, Personal Retirement Savings Accounts, published 24 September 2026.

All sources accessed 6 October 2026.