Personal Retirement Savings Account
There are different types of PRSAs. Insured PRSAs are held within a life company and give holders access to a range of investment funds facilitated by that life company. Self-Administered PRSAs are a little more sophisticated from an investment perspective and give holders significantly more options with regard how and where they can invest their funds. Self-Administered PRSAs are generally facilitated by a Revenue Approved Pensioneer Trustee.
A PRSA can be summarised as follows:
- It is a personal pension retirement structure that can be taken out with an authorised PRSA provider.
- It is a tax efficient structure that facilitates saving and investing for retirement.
- It is a type of defined contribution pension plan where the holder can make regular contributions to it, which are tax deductible, the amount of tax relief available is dependent on the holder’s age and their level of relevant earnings.
- It is a flexible pension structure that allows the holder to increase, decrease or stop their contributions at any time without any charge or penalty for doing so.
- It is a portable pension structure that can be carried from job to job or transferred to another PRSA provider, without any charge or penalty for doing so.
- It is a type of retirement plan that gives the holder significant flexibility in drawing down benefits including the facility to continue making contributions while drawing benefits.
- On death the entire PRSA fund passes to the next of kin.
- It facilitates both personal contributions and employer contributions. The total contribution limits are determined by age and by a percentage of Net Relevant Earnings, up to an “earnings ceiling” of €115,000 as illustrated below.
|AGE||% of relevant earnings eligible for tax relief|
|Under 30 years||15%|
|30 – 39 years||20%|
|40 – 49 years||25%|
|50 – 54 years||30%|
|55 – 59 years||35%|
|Over 60 years||40%|