PRSA’s have always been somewhere between a personal pension and a company paid pension. While most of the rules for pensions are the same, each type has a few differences around the edges. The rules that applied to your PRSA depended on whether the PRSA was an employer based one (even if the employer didn’t pay into it and just facilitated the payments through payroll) or one you set up yourself, whether you are self employed or just doing your own thing.
One of the benefits of having an employer based PRSA was that you could access your pension benefits from age 50 onwards. While most people aren’t in the position to retire in their fifties, a common use was to take the tax free cash and use it to pay down debt.
The Revenue recently clarified that to draw down your PRSA before age 60, you have to actually retire and not just retired/left the job that the benefits relate to.
I am sure there are plenty of people asking “How will they know if I’m retired? I could just start working later.” And that is true. The Revenue can obviously see if you are in receipt of earned income. If you are in between jobs, you may get away with it. And the Revenue are not going to crack down on people who genuinely retire and take up another role afterwards. But don’t think you can carry on working and mature your PRSA. It doesn’t take much effort for the Revenue to check!
You can still access your pension from age 60 without these stipulations applying.
If you have benefits in a Buy Out Bond or a company pension plan, you can still mature the pension from age 50 onwards without having to actually retire. In the case of company pensions, you cannot be an active member of the scheme to draw down your peansion benefits before the normal retirement age.
*You are not allowed to transfer pension benefits from a PRSA to a Buy Out Bond.
22 May 2023