for you to ensure your financial security when the time comes for you to retire. It offers a great range of benefits including attractive tax benefits and complete flexibility. It is the first product of its kind to really put you in the driving seat.
Saving with a PRSA gives you financial peace of mind for the future - so the sooner you start the better.
No matter what you might think, you’re never too young to start planning for your retirement. Look at it this way; if you were to start today and put €1,000 per year for 25 years into an investment earning a net 6% return annually, you would build up a retirement fund of €54,864. If however you were to hold off for another five years your final figure would amount to just €36,785 meaning that the €5,000 you thought you saved by waiting has cost you €18,079!
Wwhat about my state pension?
Your retirement should be a time when you’re
in a position to enjoy the rewards of working
life and do all the things you want to do without
having to worry about the cost. And face it, the
current state pension of just *€223.30 per
week isn’t going to get you far. With increased
life expectancy you can expect a healthy, active
and long retirement which makes it all the more
important for you to make sure you start providing
for it now. Remember no one else is going to do
it for you.
How
will I be able to afford it?
One of the beauties of your PRSA is its complete
flexibility, which allows you to save only what
you can afford, when you can afford it. It also
allows you to make lump sum payments if you have
extra cash available. Also, you can take payment
holidays at times when circumstances might make
bigger demands on your financial resources.
Why should I consider saving with a standard
PRSA?
Financial
peace of mind. With a PRSA, you can take personal
financial control of your future and provide for
it day by day, regardless of how your circumstances
may vary over time.
• It’s yours and yours alone: Designed
to fit in with today’s changing lifestyles,
taking your PRSA with you when changing jobs is
simple - there are no complicated transfer procedures
to worry about.
• It’s totally flexible: You pay only
what you can afford, when you can afford it, so
it should never become a burden.
• It’s up to you to call the shots:
With your PRSA you can choose how you want your
money invested and you decide when you want to
draw an income - at any time between age 60 and
75.
• It’s tax efficient: With a PRSA you
get substantial tax relief on all your contributions;
and up until retirement you pay no tax at all
on your accumulated investment. As a result the
value of your PRSA grows a lot faster than many
other types of savings or investment accounts.
(It should be noted that automatic
entitlement to tax relief may not be guaranteed.)
•
It’s cost effective: Because PRSA management
charges are controlled by legislation, it’s
a cost effective way to invest your money.
Tell me
more about the tax benefits
Because saving with a PRSA is actively encouraged
by the Government, you get to pay a lot less tax
on your hard earned cash.
• Contributions paid, up to a maximum annual percentage, attract tax relief at your marginal rate (highest rate of tax you pay).
The following table tells you the maximum percentage you can save annually dependent on your age:
| Age | Maximum Annual% of net relevant earnings |
Up to 30 yrs |
15% |
30 to 39 yrs |
20% |
40 to 49yrs |
25% |
50 to 54yrs |
30% |
55 to 59yrs |
35% |
60 and over |
40% |
NOTE: Automatic entitlement to tax relief is not guaranteed. |
|
• The maximum net relevant earnings on which
tax relief can be received is currently *€275,239
per annum. Any contributions that you make in
a year that do not attract tax relief can be carried
forward to future years.
• Certain occupations are allowed to contribute
the 30% limit irrespective of age.
• Your chosen investment fund is exempt from
tax on gains earned by that fund.
• Contributions paid while out of the workforce
may be claimed against future earnings within
certain prescribed limits.
• When you reach retirement, you can take
up to 25% of the fund value as a tax free lump
sum.
• If you are already a member of an Occupational
Pension Scheme you are entitled to tax relief
on contributions to a PRSA that are AVC PRSA contributions
only. This is explained in more detail below.
NOTE: When you invest in a fund where the performance
is directly related to the performance of the
underlying assets, which can be made up of stocks,
shares, property and bonds, you should be aware
of the following points:
• Performance can not be guaranteed.
• Returns can go down as well as up.
To ensure you are taking full advantage of your PRSA benefits, a regular review of your financial position is strongly recommended.
Can
I really devise my own savings strategy?
Absolutely! Although we do have a carefully devised
strategy
(Default Investment Strategy) available to you
for your PRSA we also offer you the option of
creating your own from the range outlined overleaf
- what you decide is entirely up to you. If you’d like to know more about the options
available to you simply make
an appointment and we’ll be happy to
talk you through them.
How much
will it cost me to set up my PRSA?”
Standard PRSA charges are governed by legislation.
These charges cover all the aspects of your contract,
from the fees of your financial intermediary and
the setting up of the contract on the systems
to providing you with investment management of
your underlying assets.
A contribution charge of 5% will apply to all
contributions that are invested in your PRSA.
The contribution charge will not apply to transfers
in from another PRSA provider, Personal Pension,
Occupational Scheme or Pension Arrangement outside
of the state. The net amount
(after this charge has been deducted) is invested
in the investment funds of your choice.
While your money remains invested a management
charge of 1% per annum will be charged against
all the funds in which you are invested. The charge
is already built into the unit price that is quoted
on a daily basis for your funds, and so no further
deduction will occur.
All commissions paid by are taken from the 5% contribution charge and management charge of 1% per annum of funds under management.
What happens
when I want to retire?
You can retire at any age between 60 and 75.
You can decide to continue making contributions
to your PRSA even after you retire, provided you
are younger than 75. You may retire earlier than
60 on the grounds of permanent ill health (which
means that you are incapable of carrying out your
own occupation or any other occupation of a similar
nature for which you are trained). There are also
certain prescribed occupations in which you can
retire before 60 but not before 50.
Your PRSA is designed to protect the capital by
retirement date. On your selected retirement date,
you can take 25% of your accumulated fund as a
tax free sum. Then you have a number of options
when it comes to deciding how to deal with the
rest of your money.
You could, for example purchase an Annuity, thus
guaranteeing an income for life. Or you could
set up an Approved Retirement Fund (ARF). In the
event that you choose the route of an ARF then
a specified amount (currently *€63,500) must
be set aside in an Approved Minimum Retirement
Fund until you are aged 75 years, unless you have
a specified guaranteed income for life (currently
*€12,700). This allows you to retain ownership
of your money after retirement and take control
over the type of investment strategy and income
you need to meet your personal requirements.
AVC PRSA is subject to separate rules which are below.
Making these decisions is important and needs careful thought, so take your time, consider all your options and get professional financial advice - that way you know you’ll always be in control.
What if
I already have a company pension?
If you already belong to an Occupational Pension
Scheme you can make Additional Voluntary Contributions
(AVCs) to a PRSA, subject to the main Pension
Scheme rules. This offers you the ideal opportunity
to provide additional benefits at retirement and
take advantage of the tax relief on contributions.
Tax relief can be claimed for AVCs as long as the total regular pension contributions and AVCs do not exceed the limits set out by the Revenue.
The following limits
are inclusive of normal contributions to your
company pension.
| Age | Maximum Annual% of net relevant earnings |
Up to 30 yrs |
15% |
30 to 39 yrs |
20% |
40 to 49yrs |
25% |
50 to 54yrs |
30% |
55 to 59yrs |
35% |
60 and over |
40% |
NOTE: Automatic entitlement to tax relief is not guaranteed. |
|
The maximum net relevant earnings on which tax relief can be received is currently *€262,382 per annum.
At retirement, the total accumulated value of your PRSA is added together with the benefits from the main Occupational Pension Scheme, of which in total may not exceed the maximum benefits permitted by the Revenue.
The amount of tax free cash is determined in line with the rules of the Occupational Scheme, and subject to the overall limits of the Revenue.
How do
I go about starting my standard PRSA
Opening your PRSA is easy. Simply drop
in to our offices on 22 Abbey Street, Ennis, call
065 6844448 or submit our PRSA
Request form below.
We’ll go through the options with you and
take you through the process so you can make up
your own mind about how to make a PRSA work for
you.
If you would like more information regarding personal retirement savings accounts, PRSA's, please complete the request form below.
