What is a PRSA?

A PRSA is a Personal Retirement Savings Account. There are two main types 1) An occupational PRSA where you can retire from age 50(if you have left employment and are not currently working and 2) A personal PRSA. Retirement from a personal PRSA is from age 60 onwards. You can choose to access from age 60 but you can access from age 75 if you wish. Pensions work because they are incredibly tax efficient. You get tax relief on the contributions that you make at your marginal rate, the fund grows tax free and you get a 25% tax free lump sum at retirement.

So for example a higher rate tax payor makes a €200 contribution into their pension but the next cost would only be €120 as they get back €80 back off the government.

The amount you get at retirement will depend on the contributions that you made into the pension along with the tax free investment returns that you make. The returns will depend on your attitude to risk. Generally speaking the more risk you take (your score will be between 1-7) the better the returns will be over time.

If you are already in a current pension then you should look into PRSA AVCs which can be earmarked toward your tax free lump sum benefit at retirement. AVCs are great especially for those who work in the public sector.

Start your pension today and contact us at 015823548 or email info@financiallife.ie