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Pension Optimizer

Shows the true cost of a pension contribution after tax relief — and how much the government effectively adds. Compares pension, ETF, and savings over time.

Read the full pension guide →

Every €1,000 you contribute costs you only

€600

after 40% tax relief

Inputs

Age-based limit: 20% of earnings (max €115,000) = €12,000

Auto-calculated: 65 − 35 = 30 years

Your contribution

€5,000

Annual gross

Tax relief received

€2,000

At 40% marginal rate

Net cost to you

€3,000

After tax relief

Government contribution

40%

Of your gross contribution

Projection over 30 years

Pension vs ETF (same gross contribution, deemed disposal applied) vs savings at 3%

At retirement (30 years)

Pension pot (pre-drawdown tax)€419,008
Same in ETF (after exit tax)€280,542
Savings account at 3%€245,013
Pension advantage over ETF+€138,466

Insight

As a 40% taxpayer, your €5,000 annual contribution only costs you €3,000 after tax relief — the government effectively adds €2,000. Over 30 years at 6% growth, your pension pot reaches €419,008. The same amount in an ETF (after deemed disposal tax) would be €280,542.

Frequently asked questions

How does pension tax relief work in Ireland?
When you contribute to an approved pension scheme, the contribution is deducted from your gross income before PAYE is calculated. This means you get relief at your marginal rate — if you pay 40% tax, a €1,000 contribution only costs you €600 after relief. Note: there is no USC or PRSI relief on pension contributions.
What is the age-based pension contribution limit?
The maximum annual pension contribution that qualifies for tax relief is an age-based percentage of your earnings (capped at €115,000): under 30: 15%, 30–39: 20%, 40–49: 25%, 50–54: 30%, 55–59: 35%, 60 and over: 40%. Contributions above this limit receive no tax relief.
What is the €115,000 earnings cap?
Revenue caps pension tax relief at earnings of €115,000. Even if you earn more, the percentage limits apply to a maximum of €115,000. For example, a 40-year-old can contribute at most 25% × €115,000 = €28,750 with full tax relief.
Is pension income taxed in retirement?
Yes. When you draw down your pension, the income is taxed as normal income (PAYE, USC, and PRSI if applicable). However, you can take up to 25% of your fund as a tax-free lump sum on retirement, subject to a lifetime limit of €200,000. Amounts between €200,000 and €500,000 are taxed at 20%; anything above €500,000 at your marginal rate.
Should I contribute to a pension or invest in an ETF?
For most Irish taxpayers, a pension contribution is more tax-efficient than investing in an ETF. Pension contributions get marginal rate relief upfront and grow tax-free, while ETFs face 41% exit tax and the 8-year deemed disposal rule. The pension advantage is largest for higher-rate taxpayers with many years until retirement.

Tax relief at marginal rate. Annual earnings cap of €115,000 applies. No USC or PRSI relief on pension contributions. Drawdown tax not modelled — pension income in retirement is taxable (25% tax-free lump sum up to €200,000, remainder taxed as income). Comparison figures are illustrative. Savings comparison does not deduct DIRT. Not financial or tax advice.