The personal retirement savings account (PRSA) is a type of pension scheme that allows you to save for your retirement while contributing to the cost of healthcare, if applicable. The Irish government introduced the PRSA in 2005 as part of its drive towards self-funding health care. If you have any questions about this new form of saving, here’s everything you need to know about setting up and operating a PRSA, including how much it costs and what happens to your money once you’re no longer working:
What is a PRSA?
What is a PRSA? A PRSA is a personal retirement savings account that you can open if you are self-employed or an employee. You can contribute to your PRSA and use the money in it to buy a pension annuity when you reach retirement age.
A PRSA is similar to an ISA (Individual Savings Account), except that instead of putting money into investments like stocks and shares, you put money into an insurance plan where it will be invested in low-risk assets such as bonds or cash funds until retirement age.
How does a PRSA work?
A PRSA is a type of retirement savings plan that can be opened by the employee and their spouse, or by an employer on behalf of its employees.
The employee contributes to the PRSA directly from their paycheck, with the amount being deducted before tax is taken out. The employer also makes contributions to the PRSA on behalf of their employees (not currently required), but these contributions are not tax-free until withdrawn in retirement or upon death (see “When can I access my money?” below).
Who can set up a PRSA?
You must be over 18 years of age to open a PRSA.
- You must be a resident in Ireland for tax purposes.
- You must be in full-time employment with an employer that participates in the PRSAs scheme (most employers do).
- You must have an Irish bank account, which you can open at any time during your life if you don’t already have one, and which will remain valid until it closes or changes ownership.
Can I open more than one PRSA into which I can make contributions?
Yes, you can open more than one PRSA. You can open a PRSA with your employer or with a financial institution. If you choose to open a PRSA through an employer, the plan must be approved by Revenue and signed by both yourself and your employer.
If you choose to open an individual personal retirement savings account (PRSA), it must be set up in accordance with Revenue guidelines for retirement plans that allow individuals to make contributions into them. This type of account has been available since 2014 but only recently became popular among employers as they discovered its benefits over traditional pension plans such as defined benefit schemes or defined contribution schemes like 401(k)s
What happens to my money after I retire?
When you retire, you can access your money at age 55. You can use it to buy a pension or an annuity. You may also choose to take a lump sum or some combination of these options.
Is there a minimum contribution amount for opening a PRSA and making contributions?
You can open a PRSA with as little as €1 and make contributions every month.
There is no minimum contribution amount for opening a PRSA, but if you don’t pay into it at all, then there won’t be anything for you when the time comes to retire. The more money you put away now, the more likely it is that your retirement will be comfortable without having to rely on government benefits like social welfare payments (the Irish version of welfare). If possible, try to contribute at least 10% of your gross income every year until retirement so that when it comes time for your golden years–and let’s face it: they all end up being golden–you’ll have enough money saved up that won’t run out anytime soon!
Can I pay in more than the minimum amount required per month into my PRSA?
Yes. You can pay in more than the minimum amount required per month into your PRSA. For example, if you want to contribute €500 per month instead of just €1,000 per year and don’t want to do it all at once, no problem! You can do that too.
The minimum amount that must be paid into a PRSA each year is €1,000 but there are no restrictions on how much money is actually deposited into the account each year by an employee or employer (as long as it doesn’t exceed their annual allowance).
If you’re thinking about setting up a personal retirement savings account, it’s important to learn as much as possible about what they are before committing.
If you’re thinking about setting up a personal retirement savings account, it’s important to learn as much as possible about what they are before committing. PRSAs are a type of pension that can be opened by anyone with an annual income of over €60,000 (or €50,000 if they’re under 50). In other words, this isn’t something that most people will be eligible for–and if you do qualify for one and decide to open one up, make sure it’s right for your needs before committing.
Conclusion
If you’re thinking about setting up a personal retirement savings account, it’s important to learn as much as possible about what they are before committing.
