Company Director Pensions - Year End New Rules 2025
Pension funding at year-end is normally a straightforward way for company directors to reduce corporation tax and build long-term retirement wealth. However, this year the rules have changed, and directors need to be aware of a key update that affects how much can be contributed.
What’s Changed?
Recent updates to PRSA (Personal Retirement Savings Account) legislation mean that your PRSA pension contribution cannot exceed your salary. For many company directors who take a modest salary but hold substantial profits in the business, this creates new limits on how much can be contributed through a PRSA alone.
Why This Matters
If you are holding significant company cash and want to make large, tax-deductible pension contributions before year-end, relying solely on a PRSA may no longer be enough.
The New Approach: PRSA Pension + Executive Company Pension
To maximise pension funding under the updated rules, most directors will now need to consider using both:
- A PRSA, capped by salary; and
- An Executive Pension (Occupational Scheme), which follows different funding rules.
When used together, these two structures can allow for significantly higher contributions in a compliant and tax-efficient way.
This Takes Some Calculation
The right blend of PRSA and Executive Pension funding depends on several factors, including:
- Your salary
- Your age
- Existing pension values
- Company profitability
- Year-end timelines
Working out the optimum structure can be a little more complex than before — but with the potential to save considerable tax, it’s worth getting right.
Need Help Before Year-End?
If you need this calculated quickly, we can take care of it. We’ll analyse your salary, company figures, and pension history, then recommend the most tax-efficient approach for your year-end contribution strategy. Feel free to give us a call on 01 5267770 if you need any help with this.
