PRSA Question

kelzer

I have a PRSA pension question...

Say I start a job and I cannot join the company pension scheme until 6 months into the job. In the mean time can I start up a PRSA pension myself and when the 6 months come can I start the company pension and continue to contribute to the PRSA pension as well as the new company one?

miles teg

No. Only one allowed

kelzer

Can I start a PRSA for 6 months and then transfer it into the new company pension?

miles teg

I think you can stop one and start another alright but not sure you can transfer in such a short period of time (there may be penalties). To be honest, 6 months isn't a huge length of time. Why not wait for the company one to start?
Also, your comapny is legally obliged to provide someone to give you advise on all this

RevBlueJeans

miles teg wrote:

No. Only one allowed

Are you sure about this?

Suppose you already had a PRSA with your previous company, surely you could continue to contribute to it for six months? Your new company may or may not facilitate you with payroll deductions and if not you would have to claim tax relief yourself.

miles teg

RevBlueJeans wrote:

Are you sure about this?

Suppose you already had a PRSA with your previous company, surely you could continue to contribute to it for six months? Your new company may or may not facilitate you with payroll deductions and if not you would have to claim tax relief yourself.

pretty sure that you can only have one. With prsas anyway, the company has to faciliate you with payroll deductions... tis the law. A person should never have to claim back tax personally on a prsa.
Company pensions may be differnet though... don't know much about them.

To the OP, unless your company pays into your pensions from their own pocket on top of your contribution, there wouldn't be much benifit to a company pension over a prsa.

whizzbang

Will the company not allow you to pay into a PRSA and then they start contrubuting to it after 6 months? From what I understand they are legally obliged to allow you to pay into a PRSA before tax is deducted?

their choice of PRSA though, not yours.

RevBlueJeans

miles teg wrote:

Company pensions may be differnet though... don't know much about them.

Hi Kelzer,

You might want to consider the above quote when you are weighing up mt's contributions.

I know of several people who contribute to a PRSA in addition to their company's occupational pension scheme. Since some companies will not allow payroll deductions for these PRSA's the employees manually claim back PAYE and (PRSI with some difficulty).

You should contact the HR department of your new company and ask them for details of their occupational pension scheme.

miles teg

RevBlueJeans wrote:

Hi Kelzer,

You might want to consider the above quote when you are weighing up mt's contributions.

I know of several people who contribute to a PRSA in addition to their company's occupational pension scheme. Since some companies will not allow payroll deductions for these PRSA's the employees manually claim back PAYE and (PRSI with some difficulty).

You should contact the HR department of your new company and ask them for details of their occupational pension scheme.

I'm not saying I'm an expert, but RBJ isn't correct either. Since your company has a 6 month waiting period, they have to provide you with the option of at least one standard prsa scheme. Here's some info:
http://www.finfacts.com/fincentre/prsa.htm

ircoha

op: The definitive answers are to be found here:

http://www.pensionsboard.ie/

There ia a clear conflict here in the replies which needs to be resolved.
See http://www.pensionsboard.ie/uploadedfiles/Publications/whataremypensionoptions10_09_03.pdf

for the answers.

rondjon

kelzer wrote:

Say I start a job and I cannot join the company pension scheme until 6 months into the job. In the mean time can I start up a PRSA pension myself and when the 6 months come can I start the company pension and continue to contribute to the PRSA pension as well as the new company one?

Simple answer to this question is Yes, what you want to do is all possible.

You can contribute to your own company pension scheme, and have a PRSA as well. You just have to make sure that your overall contribution for the year isn't greater than that allowed by revenue (15%, 20% etc).

In this situation, you will need to have something called a "standalone" PRSA where you make contributions after tax and PRSI, and then claim tax back on your contributions.

As per some of the other comments here, you can actually have as many PRSA's as you want/need. I think you can only contribute to one at a time, and again, you're limited by the overall contribution limit as a percentage of your salary.

Currently, I'm a member of a pension scheme at work, and I have 3 different PRSA's, but am not currently paying anything into them. I will be making lump sum contributions to one of them, later in the year, to take advantage of my 20% contribution limit.

ircoha

rondjon wrote:

Simple answer to this question is Yes, what you want to do is all possible.

You can contribute to your own company pension scheme, and have a PRSA as well. You just have to make sure that your overall contribution for the year isn't greater than that allowed by revenue (15%, 20% etc).

In this situation, you will need to have something called a "standalone" PRSA where you make contributions after tax and PRSI, and then claim tax back on your contributions.

As per some of the other comments here, you can actually have as many PRSA's as you want/need. I think you can only contribute to one at a time, and again, you're limited by the overall contribution limit as a percentage of your salary.

Currently, I'm a member of a pension scheme at work, and I have 3 different PRSA's, but am not currently paying anything into them. I will be making lump sum contributions to one of them, later in the year, to take advantage of my 20% contribution limit.

From http://www.pensionsboard.ie/uploadedfiles/Publications/whataremypensionoptions10_09_03.pdf
Page 25

Contributions
Contributions may be paid to a PRSA by both an individual and by
an employer, however an employer does not have to contribute.
Where an individual is a member of a company pension plan and is
included for pension benefits, contributions to a PRSA may only be
made if the plan rules do not allow for the payment of AVCs (see
section 5).

Is this the same as wht rondjon is saying?

RevBlueJeans

My understanding of the situation is exactly as ronjohn says.

I have a feeling that the 2003 document may be slightly out of date.

p11 of that document states

If you are a member of an occupational pension plan you cannot
take out an RAC or a PRSA, unless it is an AVC PRSA or unless you
have a separate source of earnings, i.e. a separate job or income.

The two guys that I know who have both occupational pensions and PRSA's both have a small income from other sources (one is a small farmer and the other has some investment income from property).


RevBJ

ircoha

RevBlueJeans wrote:

My understanding of the situation is exactly as ronjohn says.

I have a feeling that the 2003 document may be slightly out of date.

p11 of that document states
If you are a member of an occupational pension plan you cannot
take out an RAC or a PRSA, unless it is an AVC PRSA or unless you
have a separate source of earnings, i.e. a separate job or income.

The two guys that I know who have both occupational pensions and PRSA's both have a small income from other sources (one is a small farmer and the other has some investment income from property).


RevBJ

?

RevBlueJeans

To clarify:

1/ I agree with what ronjon says. It concurs with what I know to be the reality in the workplace.

2/I am of the opinion that the 2003 pensions document may have been subject to some clarification.

3/I quoted from the 2003 document to demonstratate that it is possible to have a PRSA and be a member of an occupational pension scheme at the same time. I illustrated this observation with two examples.

ircoha

RevBlueJeans wrote:

To clarify:

1/ I agree with what ronjon says. Perfect, not an issue for meIt concurs with what I know to be the reality in the workplace.Perfect, as above

2/I am of the opinion that the 2003 pensions document may have been subject to some clarification.OK

3/I quoted from the 2003 document to demonstratate that it is possible to have a PRSA and be a member of an occupational pension scheme at the same time. Never in disputeI illustrated this observation with two examples.where they had an ADDITIONAL source of income

To help the OP, and other interested parties, I have asked the Pensions Board to review this post and provide a definitive answer.

I will post the answer when I get it.

ircoha

ircoha wrote:

To help the OP, and other interested parties, I have asked the Pensions Board to review this post and provide a definitive answer.

I will post the answer when I get it.

I have heard back from the pensions board.

From the Op's perspective, for the definitive answer please email
info@pensionsboard.ie
with your question.

My opinion is as follows:

What follows assumes that the person wants all contributions to be tax effective. In other words if tax efficiency, and Revenue limits does not enter into it, then what follows does not apply.


If u are in a company pension scheme which includes an option to do AVC's then there is no scope for a PRSA.

If u are in a company pension scheme which excludes an option to do AVC's then there is scope for a PRSA for putting AVC's into. The employer can provide one or the employee can have his own but not both.

If the person has other source(s) of income outside his main employment, then he can have full PRSA(s).

However, it is best to consult the PB if in doubt, their advice is free.

I have nothing further to add here