An Executive Pension Portfolio (EPP) is an occupational pension which is set up under trust for the benefit of a single member. It is a tax efficient way of rewarding key employees, as the company can make sizeable contributions to a pension plan for the sole benefit of the member. An EPP allows you to control your contributions and investments.
It is set up to receive contributions paid by the company and/or you:
- Contributions paid by the company will qualify for corporation tax relief (within certain limits)
- Contributions paid by you will qualify for income tax relief (within certain limits)
Executive pension plans allow significant scope for your company to make whatever contributions are necessary to provide a pension of up to two thirds of your final salary.
The chart below shows an example of maximum contributions that a company can make to an executive pension – and save corporation tax.
|Maximun Tax deductible
contributions as a % of salary
|30||54% per annum|
|35||65% per annum|
|40||80% per annum|
|45||108% per annum|
|50||163% per annum|
These percentages relate to a male employee (who could also be a proprietary director) with no other pension and a normal retirement age of 60. (Source: Standard Life)
For example, for a 50‑year‑old employee on a salary of €75,000, the company can invest €122,250 each year to retirement . The company can save corporation tax on that amount.
In addition, you can also make your own contributions to your executive pension. You can normally claim tax relief on your contributions at your higher rate of tax. For more information see our section on tax relief on pension contributions or speak to one of our experienced financial advisers.