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Pensions, PRSAs and RACs

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Summary

Pension schemes available and how to set them up in Sage Payroll.

Description

A pension scheme is a way of saving money for retirement. Regular payments are made into the scheme during an employee's working life. This money is then repaid after retirement, usually as a regular income.

An employee may choose to pay into a pension scheme at any time. As an employer, you can collect pension contributions from the employee. These are then passed on to the pension provider. With some schemes, you can also make contributions on the employee's behalf.

Read more about pension options on The Pensions Authority (opens in new tab) website.

Resolution

Tax is taken from the employee’s gross pay after pension deductions apply. However, Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) are taken from an employee’s gross pay before pension deductions apply. So a pension deduction is not subject to tax, but it is subject to USC and PRSI.