PRSAs (Personal Retirement Savings Account)

pension prsa Nov 19, 2021

Pension Terminology

PRSA – Personal Retirement Savings Account (which is a type of pension).

Risk Level – Each fund has a risk level attached to it which is a guide how risky the fund is, a higher number mean a higher risk and a lower number means a lower risk. The scale is generally 1 to 7.

Tax Relief – Is a tax deduction on your pension contributions. It is an incentive to encourage people to save into their pensions.

Contribution – These are the payments you pay into the pensions fund they can be made in lump sums or recurring.

What is a PRSA?

A PRSA is an account you can use to save for your retirement. You can make lump or recurring payments into a PRSA, and these are usually tax deductible. A PRSA can be invested into different types of funds with different risk levels (higher risk means a better chance of high returns but a higher chance of losing your money and lower risk means lower returns but less chance of the fund decreasing.)

Can anyone get a PRSA?

PRSAs are available to anyone regardless of your job or employment status. The reason for this is that PRSAs are very flexible meaning that you can stop contributing at any time without any charge or penalty and can be carried from job to job with no charges or penalties for doing so.

What is the tax relief on a PRSA?

The tax relief you receive on a Personal Retirement Savings Account is related to your earnings and assuming you are paying tax. So, if your earnings put you in the 20% tax band you will get 20% tax relief on all your payments into the fund and if your earnings put you in the 40% tax band you will receive 40% tax relief on the amount of income that is subject to the higher rate of tax.

For example: John is in the 20% tax band and pays €400 into his PRSA every month. John will receive 20% tax relief on that payment which will only cost him €320.

If your contribution to your PRSA is deducted from your salary by your employer, your tax relief is given at the time you pay the contribution.

How do I get a PRSA?

If your employer does not operate an occupational pension scheme or if certain restrictions apply to the occupational pension scheme, your employer is required by law to provide access to at least one Standard PRSA.

If you have a PRSA currently and want advice you can always talk to one of our advisors for impartial advice.

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