PRSA’s – not as flexible as you think

When PRSA’s were launched, The Pensions Authority announced them as the flexible pension plan . Go on any insurance company website and their blurb on PRSA’s will market them as a flexible pension plan (I have linked just one website here, but it could be any of them). But are they really any more flexible than the traditional personal pension and company pension?

  • You set up a PRSA yourself and contribute to it for a while. You then join a company who has its own employer paid PRSA scheme. You cannot bring your personal PRSA into the scheme. You have to join the new company one.
  • You are a member of an employer PRSA scheme and move employer, who also runs an employer PRSA scheme. The new employer is under no obligation to deduct your premiums from your salary and pay into your existing plan. In fact, it is highly unlikely that they will purely because it can be an administrative headache for payroll to keep track of which payments go where.
  • You have a PRSA plan and you join a company with an old fashioned company paid pension scheme. You want to make some additional payments yourself but want to keep them separate from the main scheme. You cannot use your existing PRSA policy. You have to implement a PRSA AVC plan.
  • The Pensions Authority says “you are free to stop, start, increase or decrease your contributions at any time”.  You can do this under a personal pension scheme already! Company paid schemes are a little bit different alright as they are written under trust and there may be scheme rules obliging you to make a contribution.

PRSA’s have their use (and I use them all the time) but they are usually to legitimately get around rules that are in place for the other types of pensions.

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