Max Funding for Company Directors

Proprietary Directors have flexibility in alternating their overall remuneration between Salary and Employer Pension Contributions.

Traditionally, the maximum amount that a Company can contribute to a Director’s pension is based on a ‘max funding calculation’, which was generally based on age, marital status, pension retirement age, existing pension values, current salary and years of service. This funding limit applies to Executive Pensions & SSASs as well as Master Trusts.

However, Finance Act 2022 has brought in new rules from 01.01.2023 whereby the above max funding rules don’t apply to Employer contributions to PRSAs. This provides a great opportunity for Business Owners to maximise their retirement benefits through their company, with no upper limit on the contribution amount. PRSA funding can only be carried out for individuals who work in the company and are on a PAYE salary.