What is a PRSA?
A PRSA is a private pension plan, separate from the State pension scheme and
is available from a range of financial companies, including banks and insurance
Anyone can take out a PRSA, regardless of their employment status. It is essentially,
a tax-efficient savings account set up by you to save for your retirement. A PRSA is
extremely flexible: you (and your employer, if applicable) can gain tax relief on
contributions to it; you can take it with you when you change jobs or employment
and you can start, stop, increase or decrease your contributions at any stage.
There are two types of PRSAs available: a standard PRSA and a non-standard PRSA.
The key difference between the standard and non-standard PRSA is: Standard
PRSAs have a maximum fund management charge of 1% and a maximum
contribution charge of 5% but have restrictions on the types of funds you can
invest in; non standard PRSAs don’t have limits on charges but may have a wider
choice of funds including guaranteed funds which may be attractive to you.
You can start a PRSA by investing as little as €25 per month, however, there are a
number of things you should consider before deciding on your monthly amount:
what age you’d like to retire at, your current age, the length of time to your
retirement, and your existing income.
General consensus suggests you should aim to retire on two thirds of your current
income (this figure will include the State Pension). Because a PRSA is flexible you
can keep your contributions at a consistent amount or you can decrease them or
increase them, when appropriate, helping you to achieve your ideal retirement fund.
You can also boost your PRSA with a lump sum payment at any stage.
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