The Standard Fund Threshold is the limit that you can have across your accumulated pension arrangements without paying additional tax, known as Chargeable Excess Tax. This 40% tax is payable on excess savings over the upper cap, which will be set at €2.2 million in 2026, rising by €200,000 per year until 2029.
Standard Fund Threshold Overview
Page updated 6 January 2025
The Standard Funding Threshold (SFT) is a limit or ceiling on the total capital value of pension benefits that an individual can draw from tax-relieved pension arrangements which come into payment for the first time after 7th December 2005.
Pension arrangements are taken to include benefits from defined benefit occupational pension schemes, defined contribution occupational pension schemes, retirement annuity contracts (RACs), personal retirement saving accounts (PRSAs) and additional voluntary contributions (AVCs). This list is not exhaustive and all tax relieved pension arrangements (with the exception of benefits from the Department of Social Protection) will be used to calculate the capital value of an individual's pension benefits.
Changes in Budget 2025
At that time, the upper pension limit was set at €5 million. This was reduced to €2.3 million in 2010, and again to €2 million in 2014. This remained in place for over a decade. In Budget 2025, the government announced the first major updates to the SFT in over 10 years. From 2026, the Standard Fund Threshold in Ireland will begin to rise by €200,000 each year until 2029 when it reaches €2.8 million.
| Year | Standard Fund Threshold (SFT) |
| 2025 | €2 million |
| 2026 | €2.2 million |
| 2027 | €2.4 million |
| 2028 | €2.6 million |
| 2029 | €2.8 million |
Detailed Information
A split calculation will apply with:
(i) a standard valuation factor of 20 used to calculate the value of benefits accrued before 01/01/2014
and
(ii) with age-related valuation factors applying to benefits accrued after 01/01/2014.
When you retire or draw down your pension benefits from UCD, you will be asked to declare all of your previously crystalised pension benefits prior to UCD. The value of these benefits will be added to the capitalised value of your UCD Pension Benefits and if they exceed the relevant Standard Fund Threshold in that year, a Chargeable Excess Tax will be applied.
Once it is established that a liability to chargeable excess tax arises, the pension administrator is severally and jointly liable with the individual for the tax, and must pay the full amount (less credit for any standard rate tax paid on the individual’s retirement lump sum in excess of €200,000) to the Collector General of the Revenue Commissioners. The relevant legislation provides that the tax paid by the pension administrator is a debt owing to the administrator from the individual.
A 20 year facility allows public servants the option to have the tax deducted evenly from his/her gross annual pension for a period of up to 20 years. Should the individual die before the debt owing to the administrator is fully discharged (i.e. before the chargeable excess tax is fully recovered) the outstanding debt is released.
Chargeable Excess Tax is payable within three months of the liability arising.
Additional Resources
Further details and examples are available on the Revenue website - (opens in a new window)Chargeable Excess Tax