Personal retirement savings accounts (PRSAs) in Ireland

Are you considering your retirement options and looking for a secure way to save for your future? Personal retirement savings accounts (PRSAs) could be an ideal solution. On this page, we’ll take you through everything you need to know about PRSAs in Ireland - from how they work to PRSA tax relief, investment options, contribution requirements, and more.

PRSA stands for personal retirement savings account. They were introduced in Ireland as a way of encouraging those who may not be covered by a company pension to save for retirement. This can make them a suitable pension for the self-employed or employees with low incomes, but you can also open a PRSA in Ireland if you already have a company pension and simply want to make extra contributions to your pension pot.

Contrary to their name, PRSAs are not typical savings accounts. They’re more like investment accounts where you put your savings into various investment funds. You get to decide how often you pay in - whether in regular payments or lump sum contributions. If applicable, employer contributions to a PRSA will generally be paid on a monthly basis. The contributions you make are eligible for tax relief within certain limits set by Revenue, which can make them an attractive option for anyone saving for retirement.

You can open a PRSA pension scheme with any authorised provider, including investment firms, insurance companies, or credit institutions.

PRSAs are open to anyone up to age 75, regardless of their employment status. So, whether you’re a part-time employee, a well-paid professional, self-employed, or even out of work - anyone in Ireland can take out a PRSA to save for later life.

You can choose between a standard PRSA and a non-standard PRSA. The main differences between the two relate to the maximum charges you’ll face, and the investment options available.

With a standard PRSA, there is a cap on charges set out by law, so you won’t have any unpleasant surprises. The maximum charge you’ll face is 5% on any contributions you make, and 1% per year on the total value of the PRSA fund. In most cases, however, the fees you actually end up paying will be lower than this.

A standard PRSA offers investments in the form of pooled funds (also known as managed funds), and you can choose to put all your savings in one fund, or spread them across multiple funds.

A standard PRSA plan is generally considered to be suitable for most people, and it’s also what your employer must offer you if they are unable to provide access to an occupational pension scheme.

With a non-standard PRSA, you can usually choose from a wider range of investment options. However, it’s important to note that there is no limit on charges.

While a non-standard PRSA could potentially give you higher returns, it’s always worth weighing this up against the charges on the account. Keep in mind that, like any investment, there’s a risk that your investments will fall in value.

The main advantage of a PRSA pension scheme is that it puts you in charge of your pension contributions, meaning you can pay in however much you want, when you want. A personal pension, on the other hand, is usually taken out with an insurance firm, and may not offer the same level of control over contributions.

Because PRSA providers in Ireland have to apply and be approved by the Pensions Authority before becoming available to the public, you can only choose from those PRSA providers. A personal pension, on the other hand, may be available from a wider range of providers and offer more options.

You might also find differences related to whether the pension was set up with employer contributions and the age you’re able to access the pension. If your PRSA pension has employer contributions, you might be able to access the fund from age 50. However, personal pensions usually do not receive employer contributions, and the earliest you’ll be able to access your funds is typically age 60.

PRSA providers in Ireland are allowed to specify a minimum contribution requirement, but they cannot demand more than:

(a) €300 annually,

(b) €10 per electronic transaction, or

(c) €50 for other payment methods.

As for maximum PRSA contributions, there’s no set limit, so you can contribute as much as you like. However, you might consider the tax relief when deciding how much to pay in.

Yes, you’re eligible for tax relief on your PRSA contributions, and the amount you may be able to claim depends on your age and earnings each year. You can find more information on our pension tax relief page. When calculating tax relief, the maximum earnings taken into account are €115,000 per year.

While you can claim tax relief on contributions you make to a PRSA within certain limits, pension benefits taken from the PRSA, including any lump sum taken at retirement, are subject to income tax. However, you don’t pay tax on any investment earnings or capital gains made within the PRSA.

When you retire, you can access your PRSA pension fund between the ages of 60 and 75. At this point, you have the option to withdraw up to 25% of the fund as a tax-free lump sum, up to a maximum limit of €200,000. You can then use the remaining funds to purchase an annuity, transfer to an approved retirement fund (ARF), or take them as cash, which is taxable.

Alternatively, you can choose to keep the funds in the PRSA, which will then become a “vested PRSA”. Plus, there’s nothing to stop you adding to your PRSA; you can continue making contributions and also receive a pension income even after you retire (up to age 75). It can help to refer to the Revenue pension guidelines to review your options.

Yes, you can withdraw money from your PRSA under certain conditions. For a PRSA with employer contributions, early access is possible from age 50 if you’ve taken early retirement, and you’re out of work. However, most people who are still employed will be able to access their funds from age 60 up to age 75.

Another way to access your savings is to stop making contributions. If you haven’t made contributions for two years or more and your PRSA pension fund is worth €650 or less, your PRSA provider can close your account and refund you the amount.

One of the main advantages of a PRSA is the tax relief it provides. You can benefit from income tax relief on contributions you pay into your PRSA at different rates.

PRSAs are also particularly popular for their flexibility, enabling you to increase or lower your contributions as needed free of charge. Also, if you think you’ll be changing jobs at some point, PRSAs will let you easily transfer your account between employers or providers.

With a PRSA, you might find fewer investment options compared to other pension types, which could limit the growth of your retirement savings. Another drawback could be the potential fees, especially with non-standard PRSAs, which could erode your returns over time. Also, depending on the terms of your particular account, you may find it difficult to access your funds.

If you want to put money away for retirement, but think you might need access to your savings, you may want to explore alternative ways to save, such as a high-yield savings account from Raisin Bank. You can find a wide range of accounts from across Europe to suit your needs. All you have to do is register for a Raisin Account (it’s free), choose a savings account, transfer your funds, and watch your money grow!