Pensions
The Standard Fund Threshold: €2.4 million in 2027
Last updated 16 October 2026
The limit on tax-favoured pension savings rises from €2,200,000 in 2026 to €2,400,000 in 2027 and €2,800,000 in 2029. Savings above it are taxed at 40%.
The Standard Fund Threshold (SFT) is the most pension savings you can build up over your lifetime with full tax relief. When you draw benefits, any amount above it is a ‘chargeable excess’ and is taxed up front.
The threshold each year
| Year benefits are taken | Standard Fund Threshold |
|---|---|
| 2025 | €2,000,000 |
| 2026 | €2,200,000 |
| 2027 | €2,400,000 |
| 2028 | €2,600,000 |
| 2029 | €2,800,000 |
| 2030 onwards | Adjusted each year in line with average weekly earnings, and never lower than the year before |
The rises were set by Finance Act 2024 after the threshold had stood at €2 million from 2014 to 2025. The threshold that applies is the one for the year you take your benefits, not the year you paid in.
How chargeable excess tax works
The excess is taxed at the higher rate of income tax, 40%, when benefits are drawn. The pension administrator deducts it and pays it to Revenue. No reliefs or allowances can be set against it, but tax already paid at 20% on a retirement lump sum can be.
| Fund | €2,600,000.00 |
| Standard Fund Threshold for 2027 | (€2,400,000.00) |
| Chargeable excess | €200,000.00 |
| Chargeable excess tax at 40% | €80,000.00 |
Budget 2027: valuing defined benefit pensions
For defined benefit pensions, the value counted against the SFT is the yearly pension multiplied by an age-related factor. Budget 2027 revises those factors from 1 January 2027; the new figures are set out in Finance (No. 2) Bill 2026. Defined contribution funds are counted at their value.
Our pension top-up calculator warns you if your projected pot passes the threshold for the year you plan to retire. More detail is in Revenue's Pensions Manual, chapter 25.
Work it out
Sources
- Revenue: Chargeable excess tax: Standard Fund Threshold €2.2m (2026) to €2.8m (2029) (checked 25/10/2026)
- Department of Finance: Budget 2027 Tax Policy Changes (section 2.2: taxation of investments; chapter 9: Investment Account) (checked 25/10/2026)
- Department of Finance: Statement by the Minister for Finance on Budget 2027: fund and life assurance exit tax 38% to 35% from 1 January 2027 (checked 25/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.