Personal Pensions (or PRSAs) are for self-employed (Schedule D) earners, or those who do not wish to avail of the employer-sponsored pension scheme. Investors Receive Tax relief at the Higher rate on their investments if proper financial planning is arranged. There are maximum levels set out by the Revenue to which an investor is allowed to contribute and this is dependant on your age profile. 

The maximum funding that will receive tax-relief is: 

• Under 30 15% of Taxable earnings 
• Under 40 20% of Taxable earnings 
• Under 50 25% of Taxable earnings 

Over 55s can now invest 35% and over 60s can invest 40%. Not many will be happy with their cash-flow situation if they are setting aside 40% of earnings for pension but you can do it . Call us to see how this investment can work for you and see how you can get access to this investment in the near future. 

Options at Retirement 

As with Proprietary Directors Plans there are 2 options available at Retirement Date. 

1. To purchase an Annuity. Please see Annuity section 
2. To purchase an ARF & AMRF. Please see ARF & AMRF section 

Annuities 

An annuity is the exchange of a pension fund for a monthly lifetime income at retirement age. The annuity rate is determined by medium-term government gilt rate, and therefore is largely determined by prevailing interest rates. Thence your fund is converted into a monthly payment. As an Broker we will survey the market to attain the best available Annuity rate for you at that time. We can advise you on the best type of annuity option available. Whether you should add your wife onto the annuity. Whether you should index link the annuity. Call us today to receive advice in relation to your particular circumstances and for a free quote. Members of Occupational Pension Schemes have no option but to purchase an annuity with their pension fund. 

All retiring employees have a legal right to shop around for the best annuity rate available in the market. As these rates change often, it would be difficult to keep this web-site up to date. The differential between the lower and higher rates are substantial over time. 

If you wish to get the best annuity rate currently available, please send your contact details to us. 

When you die your Annuity may cease upon death. For those with the choice, such as holders of Personal Pensions, PRSAs, AVCs and Directors’ Pensions, the ARF regime is likely to appeal. 

ARF 

It is now not compulsory for everyone to purchase an annuity at retirement date and the option is there within your fund to purchase an ARF and AMRF. This has resulted in strong growth in pension schemes in Ireland with the flexibility being offered with the ability to purchase an ARF . 

Accumulated Retirement Fund 

The ARF regime is available for Personal Pensions & PRSAs, Company Directors (holding 5% or more) and AVC monies. Your fund can be encashed with 25% of its value going to you as a tax free cash lump sum payment, now capped at €200,000. The remainder can be used to Purchase an AMRF & ARF. 

The funds in these products can be invested in the list of assets as below. An income can be taken from same. This income will be taxed at the tax rate at that time . The income taken is at YOUR choice on an ongoing basis. You must however draw down at least , varying % 4/5 , of the fund per annum or this will be deemed drawn down and taxed at your tax rate. On death your total fund will be paid tax free to your spouse. Please contact us in relation to succession tax if you are not married and we can go through the taxation of same on death with you. 

For more information in relation to the options available to you at retirement date please give us a call and we will review your current situation and advise on the product that suits you best. 

Accumulated Minimum Retirement Fund 

To ensure you do not take or draw down ALL of your ARF retirement fund the Tax code dictates that you must have one of the following to age 75 

1. A guaranteed income of €12700 per annum. 
2. An AMRF of €112,500 

You cannot let your fund fall below €112,500 but any income deriven within the fund above this can be taken as income. As this is a complex area of financial planning please call us to review your particular circumstances so we can advise you for your particular circumstances. 

PRSA or Personal Pension Plan? 

These are a very similar product. 

A personal pension plan can have lower charges in the long term but we would only recommend this product to Professionals who cannot be engaged in the future as a Director or Employee of a Limited company. IE Professionals such as Doctors or Solicitors etc 

If there is a possibility of you joining or setting up a Company pension plan then the flexibility to transfer your fund on to your next employment category would determine that you take out a PRSA. 

The other main difference between the two is the charging structure so we will recommend and attain competitive charges suitable to your investment amount. 

PRSA Facts & Figures 

• One option for the self employed is a PRSA Personal Retirement Savings Account. 
• People who are not members of occupational pension schemes to make tax efficient retirement provisions. 
• The self-employed to have a more liberal arrangement with transferability to Company Pension Schemes and vice versa. 
• Pension provision for those who are not economically active. 

Features of an Employee PRSA 

Employers can contribute 

• The minimum contributions to a PRSA is €300.00 a year 
• If payments are made electronically the minimum for each transaction is €6.00 
• For other methods of payment the minimum is €50.00 per transaction. 
• Contributions can be suspended and restarted without charge 
• Maximum contributions on which tax relief can be granted (including any employer contributions) are as follows: 
• Under 30 15% of Taxable earnings 
• Under 40 20% of Taxable earnings 
• Under 50 25% of Taxable earnings 

Over 55s can now invest 35% and over 60s can invest 40%. Alternatively a limit of €1,523.69 may be adopted if greater 

• Flexible retirement age – from age 60 to 70 in current draft 
• Option to invest in ARF at retirement 
• Standard PRSA charges are capped at a maximum of 5% of contributions paid and 1% per annum of the fund value 

For further information on PRSA’s please contact us today. 

Options at Retirement 

Annuity 

If you are close to retirement or know someone close to retirement please ensure that they survey the market before taking the annuity provided by their pension provider. There can be massive differences in the income they will receive for the rest of their lives. This can also change in a matter of week so they should consult us the week before they retire and let us conduct a free market search to see who is the best provider for their individual circumstances at that time. 

Annuity Purchase 

While most of the media coverage has shifted away from annuities, based on current legislation most members of Occupational Pension Schemes will now have the option at retirement to purchase an annuity to provide them with an income (i.e. pension) for the rest of their life following retirement, AND have the option to Purchase and ARF AMRF. Indeed, some self-employed individuals and proprietary directors may also decide to opt for annuities over Approved Retirement Funds depending on their circumstances. 

An annuity is the rate applied to your retirement fund at retirement to calculate the level of regular income payments that the lump sum will provide you with, in other words, a regular pension. When selecting an annuity there are three main choices; 

1. Fixed or Increasing Options : You can choose a pension which will stay at the same level throughout your life or one which starts at a lower level, but increases each year at a fixed rate for example 5% to help counteract the effects of inflation. 
2. An Optional Pension Guarantee : A pensions lasts for life, but should you die shortly after retirement, no more pension payments will be made. So, to avoid having relatively little paid out of your pension plan in these circumstances, you can opt for a guaranteed period (normally the first 5 or 10 years). Then, if you should die during this period, your pension would continue to be paid for the balance of this period, to your nominated dependants. 
3. A Joint Pension Option :Instead of your pension ceasing on your death, you can arrange for up to two thirds of it to continue to your wife or husband. 

Exercising any of these three options will result in a lower initial pension. Under a Defined Benefit scheme, the retirement options are outlined in the rules of the scheme. Most pension arrangements nowadays provide an Open Market Option, which allows you shop around and buy your annuity (Pension) from the most competitive life assurance company. It always pays to shop around. 

Annuity Rates are influenced by: 

Age – the younger you are the lower the annuity rate you will get, as the life assurance company will on average, have to pay out an income for a longer period of time. 

Gender – As females live on average longer than males, therefore females of the same age, will get a lower annuity rate than their male counterpart. 

Optional Benefits / Pensions Options / Additional Voluntary Contributions 

You can improve your retirement benefits and reduce your tax liabilities by making additional voluntary contributions (subject to Revenue limits). 

Serious Illness Cover 

A lump sum is paid into your retirement fund in the event of you suffering one of a number of specified illnesses (or undergoing a specified procedure), such as Heart Attack, Cancer (Invasive Cancers), Stroke or Coronary By-pass. This lump sum will enhance your retirement benefits should you have to retire early. 

Flexible Life Assurance Cover 

While the value of your plan will be paid out to your dependants should you die before retirement, this may not provide enough especially if you have a young family. By choosing additional life cover, you could protect your family from suffering any financial hardship in the event of your death. 

Income Protection 

This option will give you a regular income in the event of you becoming totally disabled. 

Waiver of Premium 

If you became unable to work due to illness or accident, this option would cover your pension contributions until you recovered, died or until the end of the contribution period.