Executive PRSA Option

A business owner PRSA, should always  be weighed up against an Executive Master Trust alternative, on a case by case basis, but it does carry the advantage of a full tax-free payout to your spouse on death, before retirement, as well as the option to phase retirement through multiple PRSA holdings.

An employer sponsored Non Standard PRSA, may sometimes offer lower charges than a Master Trust, with equivalent fund choice.

We always strive to grant 100% allocation, which means that the minimum contribution is €500.00 PM, and the maximum AMC is 1.30% PA, dependent on provider and fund choice. The typical AMC is 1.25% PA, with 100% allocation, inclusive of both initial and long term retained broker support.

Yes, but in our view, it depends on whether the the directors pension is being max funded.

The “one times salary” PRSA restriction, was introduced by Section 12 of the Finance Act 2024.

However, Chapter 24 of the Revenue Pensions Manual which deals with PRSAs (last updated in April 2024) is yet to be updated in line with this restriction.

The Revenue Manual does already state that where an employer is contributing to a PRSA on behalf of an employee or director, the PRSA is deemed to be an “arrangement” within the definition of a “sponsored superannuation scheme”.

This means that any PRSA value must be included in running Revenue Maximum Funding quotes under an Executive Pension Plan (EPP), but an update as to whether an employer can still fund a PRSA beyond a max funded EPP, also still awaits an update.

Our approach therefore,  is to err on the side of caution, as we are concerned that when Revenue does provide an answer, we expect them to confirm that a PRSA that has employer contributions in respect of the same employment, should be treated as a ‘scheme’.

 We think it is best to protect our clients from potentially ending up in an overfunding situation at a later date.

We work with all leading PRSA providers in the Irish market, e.g. Zurich, New Ireland, Aviva, Irish Life, Standard Life etc, and enjoy access to over 23 separate fund managers.

No a PRSA is held in your own name, so does not require a Trustee appointment.

A PRSA provides full tax relief on contributions, as well as tax-free growth, and a tax-free lump sum come retirement.

This means:

1. Company-funded Executive PRSAs effectively receive 52% PAYE relief, plus corporation tax relief against profits@12.5%

2.There is no DIRT or capital gains tax on investment growth.

3. Up to 25% of your eventual PSRA retirement pot can be taken as cash, with the first €200,000 completely tax free.

Employers can pay regular and single lump sum contributions to their executive PRSA. 

An Executive PRSA can also accept transfers from other Executive pensions as well as previous group schemes – these would usually be paid as electronic fund transfers from other institutions.

Employers can pay a single contribution at any time, which can be done instead of, or as well as, paying regular monthly or annual contributions.

Senior employees and non-executive directors can make regular contributions on the same basis as their employer with the combined contributions payable through company payroll. They can also make one-off lump sum payments within Revenue Limits via EFT.

Yes, all private pension holders are still entitled to the State pension in addition.

If you die prior to retirement, your full Executive PRSA value is payable as lump sum to estate. There is no requirement to transfer any part of the funds to an ARF and there is no inheritance tax liability between spouses.

Under a PRSA, you can now draw your plan benefits from age 50 provided that you are bona vide retired, however, if you have to stop working due to serious ill-health, you can take your pension benefits earlier.

You can contribute and then draw down your retirement benefits from your PRSA up a maximum age limit of 75. 

Where a PRSA holder has not commenced taking retirement benefits and has reached their 75th birthday, they can then access their 25% tax-free lump sum and must vest their PRSA.

A vested PRSA is treated for tax purposes as the equivalent of an ARF.

This means that an imputed distribution of 4% pa, will apply to the PRSA from age 61, increasing to 5% from age 71.

On death, the vested PRSA will be treated in an identical manner to an ARF as it will form part of a deceased’s estate.