There has never been a better time to start a pension. If you plan to retire well, it’s never too early (or late) to think about a pension.
There are different types of pensions. A pension is the most tax efficient way you can save money. Also, if you are an employer, you are legally obliged to allow staff access to a standard PRSA arrangement. Your first port of call when investing in a pension is to talk to a bank or to an authorised pension adviser. Below is a quick guide to the types of pensions available to you.
Personal retirement savings account (PRSA)
Certain financial providers, including banks, building societies, insurance companies, and authorised investment firms, provide PRSAs. The money paid into a PRSA is invested in pooled investment funds, which are provided by unit trusts and some life assurance companies.
Anyone may open a PRSA, irrespective of whether they are working or not. However, only people who are self-employed, or who are employees not covered under an occupational pension scheme, may claim tax relief on contributions made to a PRSA.
Generally, the benefits under a PRSA may be taken between the ages of 60 to 75. Access before the age of 60 is allowed in the event of ill health or certain other limited circumstances. If the PRSA owner dies, the PRSA fund forms part of the owner’s estate and is administered in accordance with the provisions of the owner’s will.
On retirement, the PRSA owner may withdraw up to 25% of the fund in cash, up to a maximum of €200,000 in cash. The remainder of the benefits are payable as follows:
The balance of the fund may be left in the PRSA (which becomes a “vested” PRSA) and used to make future withdrawals. These withdrawals will be subject to income tax and USC.
Alternatively, the fund
