Executive pensions
Fund a generous pension from your company, before tax, and take money out of the business in one of the most efficient ways available.
What it is
An executive pension is an occupational scheme set up by a company for a specific employee, typically an owner-director or senior member of staff. The company funds it, the contributions are a business expense, and they are not treated as pay for the person benefiting. For business owners it is often the single most efficient way to take value out of a company and build personal wealth at the same time.
Because it is an employer-sponsored scheme, an executive pension is not held back by the age-related percentage limits that cap personal contributions. Instead the amount that can be funded is set by Revenue’s maximum funding rules, which are generous for directors with salary and service behind them. This is why the executive pension is a cornerstone of planning for company owners.
Who it is for
- Owner-directors of limited companies
- Senior executives whose employer will fund a scheme for them
- Business owners with surplus cash in the company they want to move into personal hands efficiently
- Directors approaching retirement who want to fund to the maximum while they can
How it works
The company sets up the scheme for the individual and makes contributions, which are invested until retirement. Those contributions reduce the company’s taxable profit and carry no income tax, USC or PRSI for the director, unlike salary or dividends. The fund grows tax-free. At retirement the director can take a tax-free lump sum, then move the balance to an Annuity (also known as a pension for life) or an ARF (Approved Retirement Fund).
The tax treatment
This is where the executive pension stands out. A company contribution is a deductible expense, so it lowers the corporation tax bill. It is not a benefit in kind, so the director pays no income tax on it going in. And it avoids the employer and employee PRSI and the USC that salary attracts. The funding ceiling follows Revenue’s rules on salary, service and existing benefits rather than the personal age bands, so directors can often fund substantial amounts. The Standard Fund Threshold, the lifetime cap on tax-relieved pension benefits, is €2.2 million from January 2026 and rises by €200,000 a year to €2.8 million by 2029.
Why talk to BDS
Getting an executive pension right means funding to the maximum the rules allow without breaching them, choosing sound funds, and planning the drawdown well ahead of retirement. David Sheahan works directly with owner-directors across Limerick, Dublin and Galway to set the contribution level, compare providers, and keep the plan on track year to year. Because we are not tied to any provider, the advice serves you and your company, not a product provider.
Common questions
Potentially a great deal. The limit follows Revenue’s maximum funding rules based on your salary, service and existing pensions, not the personal age-related caps. We calculate your maximum.
No. It is not a benefit in kind, so there is no income tax, USC or PRSI on it for you, and it is a deductible expense for the company.
Yes. At retirement you can take a lump sum within the Revenue limits, then move the balance to an ARF (Approved Retirement Fund) or an Annuity (also known as a pension for life).
The sooner the better, because funding room builds with salary and service and the fund has longer to grow. If retirement is close, there is often scope to fund heavily in the final years.
Other kinds of pension
Personal pensions
Company pensions
AVCs
PRSAs
Important information
Contribution limits, tax relief rates and thresholds are set by Revenue and apply to the 2026 tax year. They can change in future Budgets and Finance Acts, and the right approach depends on your own circumstances. The examples are illustrations, not projections of what you would receive.
David Sheahan Insurance & Investments Ltd t/a BDS Financial is regulated by the Central Bank of Ireland. Reg. no. 115813. Offices in Limerick, Dublin and Galway.
This content is general information and is not financial advice. The value of investments can fall as well as rise.
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