Max Funding for Company Directors

Proprietary Directors have flexibility in alternating their overall remuneration between Salary and Employer Pension Contributions, unless they have a contract of employment specifying what their salary is to be.

Traditionally, the maximum amount that a Company can contribute to a Director’s pension is based on a ‘max funding calculation’, which is 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 2024 has brought in new rules from 01.01.2025 whereby Employer contributions to PRSAs are capped at the salary in that year.

So Business Owners now have 2 options when calculating how much to contribute to an Employer sponsored Pension: Contributing to a Company Scheme (such as a Retail Master Trust) or a PRSA. The options will vary greatly so please speak to us about this.