Lesson 7.4 · 4 of 5 · Tax, pensions and protection where you live
Pension tax relief in Ireland: PRSAs, auto-enrolment and the limits
Irish pension contributions get income tax relief at your marginal rate, within a limit of 15% to 40% of your earnings, depending on age, on pay up to €115,000. Since 1 January 2026, most employees without a workplace pension are auto-enrolled in MyFutureFund, where the employer and the State add money instead of tax relief.
Terms in this lesson
- Compound interest
- You earn on your past earnings too, not just on the amount you started with.
- Mutual fund
- A fund where you buy units directly from the manager, at a price calculated daily.
Opening question
You pay income tax at 40% and put €1,000 into a PRSA. Roughly what does it cost you after tax relief?
Relief is at your marginal rate. At 40%, €1,000 into the pension cuts your income tax by €400, so it costs you €600. Relief applies to income tax only, not to USC or PRSI.
It does not matter if you get it wrong: trying first helps you remember.
How auto-enrolment works in Ireland (MyFutureFund)
Definition
Who is auto-enrolled?
Employees aged 23 to 60, earning €20,000 or more a year, with no pension through payroll.
Auto-enrolment began on 1 January 2026. Your employer signs you up and deducts your contribution from pay. Your employer adds the same amount, and the State adds €1 for every €3 you pay in. Contributions are capped at gross pay of €80,000 a year.
| Period | You | Employer | State |
|---|---|---|---|
| 2026 to 2028 | 1.5% | 1.5% | 0.5% |
| 2029 to 2031 | 3% | 3% | 1% |
| 2032 to 2034 | 4.5% | 4.5% | 1.5% |
| 2035 onwards | 6% | 6% | 2% |
Percentages of gross pay. The rates rise on these dates for everyone in the scheme, however long you have been in it. You must stay in for six months; you can then opt out in months seven and eight and get your own contributions back. The employer and State money stays in your fund.
Work it out
In 2026 you earn €40,000 and are auto-enrolled all year, with the 2026 rates of 1.5% from you, 1.5% from your employer and 0.5% from the State. How much goes into your pension in total that year, in euro?
A hint
Add the three rates and apply them to €40,000.
You: €600. Employer: €600. State: €200. Total: €1,400 a year, of which €800 did not come from your pay.
What is a PRSA and how does it differ from a workplace pension
Set up by your employer, often with an employer contribution. If you are in one through payroll, you are not auto-enrolled.
A personal retirement savings account that you own. It moves with you between jobs, and an employer can contribute to it too.
The State auto-enrolment scheme. No income tax relief; the State top-up takes its place, and your employer matches what you pay.
Watch out
What does a PRSA cost?
Standard PRSAs have capped fees; non-standard ones do not.
A Standard PRSA can charge at most 5% of each contribution and 1% a year of the fund, and invests only in pooled funds. A Non-Standard PRSA can invest more widely, with no cap on fees. Over 30 years, a difference of 1% a year in fees can take a large slice of the final pot. Money in a pension is generally locked away until retirement age.
Match the terms
Match each pension with its description.
Tap a term, then its definition.
MyFutureFund is the State auto-enrolment scheme. PRSAs are personal and portable; Standard ones cap fees. An occupational pension is your employer’s scheme.
Pension tax relief limits by age in Ireland
| Your age | Maximum with relief, as a share of earnings |
|---|---|
| Under 30 | 15% |
| 30 to 39 | 20% |
| 40 to 49 | 25% |
| 50 to 54 | 30% |
| 55 to 59 | 35% |
| 60 and over | 40% |
Earnings above €115,000 a year are ignored. Relief is from income tax only, at your marginal rate; USC and PRSI are still due on the money you pay in.
Work it out
You are 35 and earn €60,000 a year. With a limit of 20% of earnings at your age, what is the most you can pay into a PRSA this year and get income tax relief on, in euro?
This exercise is in the free account, where we also save your progress.
Create a free accountCheck yourself
You are 52 and earn €150,000 a year. The limit at your age is 30% of earnings, counting earnings up to €115,000. What is the most you can pay in with relief?
This exercise is in the free account, where we also save your progress.
Create a free accountWhat would you do?
You have just been auto-enrolled. Money is tight this year, and you are thinking about opting out in month seven. What do you do?
This exercise is in the free account, where we also save your progress.
Create a free accountThese are the general rules for individuals resident in Ireland. Your own situation may differ: check Revenue’s pension pages and the Pensions Authority, or ask a qualified financial adviser.
What you learned
- Since 1 January 2026, auto-enrolment adds an employer contribution and a State top-up to what you pay, starting at 1.5% + 1.5% + 0.5%.
- A PRSA is a personal pension you own; Standard PRSAs cap fees at 5% of contributions and 1% a year.
- Pension tax relief runs from 15% to 40% of earnings by age, on earnings up to €115,000, at your marginal rate.
You reached the end
Keep what you learned
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Save your progress with a free accountLessons are educational. They are not a recommendation to buy or sell. Investing involves risk and you can lose money. Sources: Revenue, Tax relief for pension contributions and Tax relief limits (checked 29 October 2026); gov.ie, MyFutureFund contribution examples for employees; Citizens Information, Auto-enrolment (MyFutureFund); Pensions Authority, Personal retirement savings accounts; Department of Finance, Budget 2027 Tax Policy Changes.