Pensions

PRSA's

A PRSA is Personal Retirement Savings Account. They were introduced by the Government in 2002 to increase the level of retirement planning in Ireland.

The PRSA is owned by the individual. Contributions can be made to a PRSA by:

• The individual only,
• The individual's employer only,
• Both the individual and the individual's employer.

Once the PRSA is taken out the individual can continue to contribute to the plan regardless of their employment situation.

There are two types of PRSA's:

• A Standard PRSA
  - Charges are capped at 5% of each contribution.
  - Management charge is capped at 1% per annum of the fund value.
  - Limited fund choice.
  - Execution only.
• A Non–Standard PRSA
  - Charges are not capped and in the majority of cases are higher than a standard PRSA.
  - Much wider range of fund choice.
  - Advise from a financial consultant.

Tax Relief Limits

Age	% of Income
<30	15%
30-39	20%
40-49	25%
50-54	30%
55-59	35%
>60	40%

The table on the left explains the tax relief limits currenly in place for PRSA's in Ireland.

There is a limit in relation to Net Relevant Earnings that can be taken into account for the above limits. The max Net Relevant Earnings limit for 2008 is €275,239.

PRSI and Health Levy

PRSA contributions are:

• Deductible for PRSI and Health Levy against earnings from a non –pensionable employment, i.e. Schedule E income.
• Not deductible for PRSI and Health Levy against earnings from a self employed trade or profession, i.e. Schedule D income.

When can benefits be taken?

An individual can draw on a PRSA at any time after age 60 but before age 75.

Retirement Benefit Options

After taking up to 25% of the accumulated fund as a tax – free lump sum you will have three options with regard to how the balance of your accumulated fund is used:

• Use the remaining fund to purchase an annuity with a life company.
• Invest the remaining fund in an Approved Retirement Fund in your own name.
• Take the remaining fund as a taxable lump sum.

Option 2 and 3 may be subject to first investing €63,500 of the remaining fund in an AMRF or annuity.