PRSAs
Personal Retirement Savings Accounts were introduced by the Government In 2003 to increase pension coverage in Ireland.
Basically any individual who wishes to save for retirement can take out a PRSA. However you will only receive tax relief in respect of non-pensionable earnings and self employed earnings from a trade or profession.
Key Factors in PRSAs
Portability:
They are very flexible and allow you to continue to contribute irrespective of your employment situation e.g. if you move from a company to being self-employed. You can also bring them from one employer to another and can move from one PRSA provider to another without charge.
Types:
There are two types of PRSA, Standard and Non-Standard with most of the providers concentrating on the former.
Standard – Charges are restricted to a maximum of 5% of contributions and 1% of the accumulated fund.
Non-Standard – No cap on charges and tend to have wider fund choice.
In both cases the relevant PRSA contract will have a default investment strategy for investors who do not wish to choose their own investment fund.
No Risk Benefits:
The cost of risk benefits (i.e. life assurance cover, serious illness cover etc) cannot be deducted from PRSA contributions or funds.
Tax Relief:
If you are not a member of an employee pension arrangement or if you are self-employed you will be able to claim full Income Tax relief on PRSA contributions up to the following percentage relief limits:
Age / % of Net Relevant Earnings
Under 30 years- 15%
30 – 39 years- 20%
40 - 49 years- 25%
50 - 54 years- 30%
55 – 59 years- 35%
60 years and over- 40%
A 30% earnings limit will apply, irrespective of age, to certain specified sportspersons:
- athletes
- badminton players
- boxers
- cyclists
- footballers
- golfers
- jockeys
- motor racing drivers
- rugby players
- squash players
- swimmers
- tennis players.
