Personal Retirement Savings Account (PRSA)

A Personal Retirement Savings Account (PRSA) is a type of long-term personal pension plan. It is like an investment account that is designed to let you save for retirement in a flexible way.

Your PRSA is a contract between you and a PRSA provider in the form of an investment account. You can change employment and continue to use the same PRSA and you can switch from one PRSA to another at any time, free of charge.

You can get tax relief for the contributions you pay into your PRSA.

When you retire, you have the same options with a PRSA as with other personal pensions – read about options on retirement for personal pensions.

Most people can get a PRSA but they can be especially useful if you have no other pension arrangement. Employers that do not have an occupational pension scheme for their employees must provide access to at least one Standard PRSA. Employees who are not entitled to join a pension scheme within 6 months of service must be given access to a PRSA by their employer. Read more about employers' obligations and PRSAs (pdf).

There are two types of PRSA:

• Standard PRSA
• Non-Standard PRSA

The main differences are:

• The charges are capped for standard PRSAs but not for non-standard PRSAs
• Types of investment are restricted in standard PRSAs but not in non-standard PRSAs

You can read more about the differences between Standard and Non-Standard PRSAs in A consumer and employer's guide to PRSAs (pdf) produced by the Pensions Authority.

Standard PRSAs are likely to meet the needs of most people. The level of charges on your account is important to consider, as the charges imposed reduce the fund you can build up. On your retirement, the size of your fund will depend on your contributions and the investment performance less any charges. It is not possible to predict investment performance.

Charges on Non-Standard PRSAs are not capped and in most cases, are higher than Standard PRSAs. If you are considering a Non-Standard PRSA, ask for a full explanation of the differences between this product and the Standard product. You should beware of promises of better returns on Non-Standard PRSA products as predicting investment performance is extremely difficult.

Investment of your money

Standard PRSAs invest only in pooled funds where the risk is spread across a large number and variety of investments. Non-Standard PRSAs can offer wider investment choices. However, you need to be sure that you understand the investment choices and the reasons why you should choose them. If you do not understand how your pension will be invested, then you should consider if this product is best for you.

You should also be sure that you can afford the monthly payment suggested and that this is the most effective payment for tax relief.

You should get a report on investment performance every 6 months.

You should get a statement of reasonable projection every year showing the estimated benefits at retirement you could expect, based on certain assumptions.

If you are considering whether to invest in a PRSA, you should ask yourself the following questions.

Is there an existing pension scheme available to me in my job?

If not, you should consider making provision for your retirement and a PRSA may be the option for you. If you already have a good pension arrangement, you may not need to make any additional provision, or you may be able to top up your benefits by making Additional Voluntary Contributions (AVCs). If there is no AVC facility, your employer must provide access to a PRSA.

Should I start a PRSA if I already have a personal pension plan?

You should seek professional advice based on your circumstances. Contact a broker or your pension provider for more information.

Do I need a PRSA if I already have a defined benefit scheme?

Defined benefit pension schemes promise a pension related to your salary (for example, two-thirds of final salary on retirement). You may not need to make any further pension provisions if you have this type of pension. Transferring from a defined benefit scheme into a PRSA involves a risk so you will need to assess your financial position and weigh up the advantages and disadvantages.

Do I need a PRSA if I have a defined contribution scheme?

A defined contribution scheme is also based on investment and has an investment risk - your pension will depend on the contributions you make, together with the investment performance of your fund, less any charges. If your employer is making a contribution to your existing scheme, you should find out whether this will continue if you transfer to a PRSA.

PRSA providers cannot require a minimum contribution of over:

• €300 a year
• €10 for each electronic transaction
• €50 for each other transaction

You can stop, start, increase and decrease your contributions at any time, without charge. However, a PRSA provider may require notice of a change.

Contributions received by PRSA providers must be held in a custodian account.

You should get a statement of account every 6 months showing your contributions (and any by your employer) and the transfer value of your PRSA.

Contributions to PRSAs are disregarded from assessment in means-tested social welfare schemes except Supplementary Welfare Schemes.

If your employer does not operate an occupational pension scheme, or if certain restrictions apply to the scheme it does offer, your employer must provide access to at least one Standard PRSA. T

This rule applies to all employers, regardless of the number of employees and whether they are full-time, part-time, fixed-term or contract.

Contact the HR manager or Payroll Section at your employment to find out more about the Standard PRSA(s) they provide.

The Financial Services and Pensions Ombudsman can investigate and decide on complaints, concerning disputes of fact or law and errors in relation to occupational pension schemes and PRSAs. The Ombudsman can give any directions necessary to resolve the complaint or dispute and can give financial compensation. This financial compensation cannot be more than the actual loss of benefit under the complainant’s occupational pension scheme or PRSA. The Ombudsman does not have the power to award legal costs. All decisions made by the Ombudsman are binding between the parties but can be appealed to the High Court.

You can read more about making a complaint about your pension.

The Pensions Authority publishes A consumer and employers’ guide to PRSAs (pdf).

The Pensions Authority and Revenue are jointly responsible for approving PRSA products in Ireland. The Pensions Authority supervises the activities of PRSA providers in relation to their approved products and monitors compliance with the legislation about PRSAs. The Pensions Authority also keeps a register of PRSA providers and their products.