Starting a pension/PRSA
Saving for retirement is important. People are living longer and leading more active lives in retirement. As a result, it is more important than ever for you to think about where your income will come from when you retire.
It is important for you to take control of your retirement planning and make decisions regarding your pension irrespective of your age. It is often not understood that being a member of a pension scheme can be an extremely valuable asset.
The Authority has an online calculator which allows you to estimate the pension contributions you would need to pay in the future to target the level of pension you hope to receive when you retire. The calculator shows you the contributions you would need to pay if you start now, and if you wait until closer to retirement to start. The calculator can be accessed here.
For further information about the various types of pension arrangements that are out there, click here to go to the ‘Understanding pensions’ section of the website.
Personal retirement savings accounts (PRSAs)
A personal retirement savings account (PRSA) is an account you can use to save for your retirement. It is an investment account because you can invest your savings in various investment funds through your account. You can make regular payments or lump sum payments to your PRSA, and these are usually tax deductible. You don’t pay tax on any investment gains but you might end up paying tax on the retirement benefits you get from your PRSA. You can take out a PRSA with an authorised PRSA provider.
A PRSA provides benefits at retirement based on the amount of payments or ‘contributions’ you have paid in and the investment returns earned on those contributions.
PRSAs are available to you regardless of your job or employment status. You can take out a PRSA if you are a part-time or casual employee, a highly paid professional, self-employed, a homemaker, a carer, a jobseeker, a contractor, an employer, an employee or a partner in a partnership.
PRSAs are flexible; you can increase, decrease or stop your contributions at any time without any charge or penalty. PRSAs are portable; you can carry your PRSA from job to job or transfer it to another PRSA provider without any charge or penalty.
If your employer does not provide you with access to an occupational pension scheme or if certain restrictions apply to their scheme, then you must be provided with access to a standard PRSA.
For further information about PRSAs, see the guide on ‘PRSAs – A consumer and employers’ guide’ here. A register of PRSA providers and their approved products is also available here.