I had to retire from the HSE on the grounds of ill health. Due to the illness, I would be unable to safely do my job as a consultant. I ended up above my pension fund threshold in January 2025. But if left to retire normally, I would have done so in 2027, when I could have availed of the increases in SFT (Standard Fund Threshold).I am now paying €336 per month to Revenue for the next 20 years. Can I challenge this?Although “understandably frustrating”, the reader is unlikely to succeed in challenging the tax, despite retiring early due to ill health, according to financial adviser Daniel Hardiman.Hardiman, who is managing director of Hardiman Life & Pensions in Tuam, Co Galway, says the threshold that applies is whichever was in force on the date the reader’s pension began, “not a later, higher one”.The Standard Fund Threshold (SFT), the maximum amount an individual can accumulate before becoming subject to chargeable excess taxation, rose for the first time since 2014 by €200,000 in January. It will rise by €200,000 each year until it reaches €2.8 million in 2029. Thereafter, the SFT will be indexed to wage growth.As illness forced the reader to retire in 2025, they were measured against that year’s lower limit rather than 2027’s higher one, despite the fact that is the year they would have retired in the absence of ill health, Hardiman says.“A second factor compounds this for early and ill-health retirees specifically. Since 2014, public service pensions have been valued more highly the younger you are when they start, making it easier to breach the threshold than for someone retiring at normal age,” he says.Will the State’s plan for the Carlton Cinema site revitalise O’Connell Street? Listen | 25:33An appeal from the reader based on their taxation should they have retired as normal in 2027 would not succeed with Revenue, Hardiman says.“The rules must be applied as they stood on your retirement date.”“It is, however, worth checking the chargeable excess tax (Cet) bill you’re now paying was correctly calculated,” he says.It is also worth asking their HSE pension administrator for a full breakdown of how their pension was valued, what threshold was applied and whether tax already paid on the lump sum was credited against the Cet bill, Hardiman says.[ How big should your pension pot be for a comfortable retirement in Ireland?Opens in new window ]“At €336 a month over 20 years, that’s a total repayment north of €80,000, so it’s worth having a public sector pensions tax expert check the figures. Any genuine error can and should be corrected,” he says.He adds that it is “not all one-sided”, noting that the reader’s ill-health pension is paid in full - unlike ordinary early retirement, which is normally reduced.“You also got two years’ earlier access to your pension and lump sum than you would have waiting for 2027, which is worth weighing against the tax charge in any comparison,” he says.The SFT was introduced in 2005 at a level of €5 million, increasing each year before it was cut back, before falling to €2 million in 2014.Hardiman says the threshold generally “catches more people than it used to, and not always the people you’d expect”.“Senior public servants – consultants, senior gardaí, judges and others – can breach it simply through the value of a career-long defined benefit pension, regardless of what they’re paid in cash terms.”“Anyone with a large private pension pot should be equally alert. Once the SFT settles on €2.8 million, any private pension value above it is taxed at 40 per cent upfront.“And because further income tax and USC then apply when that excess is eventually drawn down, the effective combined tax rate on the amount over the threshold can run as high as 70 per cent. “It’s a bracket worth knowing when you’re well before retirement - not after.”If you have work-related questions, from how to deal with burnout to running your own business, The Irish Times Work Q&A column is here to help. You can use the form below to submit your question. Please limit your submissions to 400 words or less and please include a phone number. Your name and contact details will be confidential and only be used for verification purposes. Any details about your employer will also be anonymised.