PRSA is a long-term investment that aims to help you build up a pot of money that you can use to provide an income for yourself when you retire.
What is a PRSA?
PRSA stands for personal retirement savings account and it’s a long-term saving product which is specifically designed to help you build up a pot of money to use to provide an income for yourself when you retire. You won’t be able to take your money until you retire.
There are two types of PRSA available:
1 - Standard PRSA has a maximum charge of 5% on the contributions you pay and 1% per annum on your fund value.
2 - Non-Standard PRSA doesn’t have any maximum limits on charges but has a wider fund selection available for you to invest in.
Who can take out a PRSA?
PRSAs are available to everyone, whatever your job or employment status.
You can even continue to contribute to a PRSA after you retire up to age 75.
How does it work?
You invest money either regularly or make one off payments as and when you want. The money that you contribute into a PRSA is usually subject to tax relief up to certain limits and you can change how much you are paying or stop your contributions at any time without any charge or penalty.
This money is invested in funds, which you can choose based on your retirement goals and your attitude to risk. Please note that the funds available to choose from are different between the Standard and Non-Standard PRSAs. The aim is to grow your pension money over time, however you need to be aware that, regardless of which funds you choose, the value of your pension money can go down as well as up.
The benefits that you get once you retire will depend on how much money you have paid in and the return that’s been achieved following investment.
When you retire
You can choose to take benefits from a PRSA at a retirement date of your choice between 60 and 75. If you are seriously ill or retiring from employment you may be able to take benefits earlier than this.
There’s different options of how you can take your money on retirement including a tax-free cash sum, a taxable cash sum, a regular income for the rest of your life (known as an annuity), leave your funds invested in your PRSA to withdraw at a later date or you can invest your money in a post retirement investment product called an Approved Retirement Fund (ARF) or an Approved Minimum Retirement Fund (AMRF).
Depending on your circumstances you may take a mixture of all of these options.
There are lots of rules about how these different options work including minimum and maximum amounts and tax implications. When you are ready to think about your retirement options then your Financial Broker will be able to help you make sense of what the right option for you is based on your individual circumstances or you can take a look at the At Retirement section which gives you more information.
Important information about tax
Where we’ve mentioned tax, what we say is based on our understanding of current law and tax practice. These could change in the future and along with any changes in your personal circumstances could affect how much your plan is worth and your tax liability.
Where can I find out more information?
For information on how much you may need to live the retirement you want you can visit our Mind the Gap page.
Other resources available for you are:
- Pensions Made Simple Guide
- Investment Options Guide
Or, you can speak to your Financial Broker.
WARNING: The value of your investment may go down as well as up.
WARNING: If you invest in this product you may lose some or all of the money you invest.
|WARNING: If you invest in this product you will not have access to your money before you retire.|
|WARNING: These products may be affected by changes in currency exchange rates.|