Finance Bill removes age 75 limit on PRSAs - no need for an ARF anymore?

S

Steven Barrett

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Finance Bill is published and like has already been pointed out, the Age 75 limit on the PRSA is being removed. So you can invest in a PRSA, take your 25% lump sum and the remainder can stay invested in the PRSA for the rest of your life and you can take an income from it. Why would you have an ARF? I am sure Brokers Ireland are drafting a submission to the minister as we speak on why this is a bad thing (there goes 4% commission on a massive lump sum!!).

The personal pension plan is also being done away with from 1 January 2024.

The direction everything is going, it will be Master Trusts and PRSAs for pensions, both under the control of the Pensions Authority.

It also means that fees will be higher as the personal pension and the old exec pension could be very competitively priced. That level of pricing isn't there in the PRSA and Master Trust.


Steven
www.bluewaterfp.ie
 
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Steven Barrett said:
So you can invest in a PRSA, take your 25% lump sum and the remainder can stay invested in the ARF for the rest of your life and you can take an income from it.
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Do you mean the balance remains invested in the PRSA?

A lifetime pension vehicle makes a lot of sense to me. I’m sure the PA’s fees will come down given the significant level of additional assets that will come under their remit.
 
It only suggest that it amends section 787k meaning “or after he or she attains the age of 75 years” is to be deleted. There is no suggestion that any other section of the TCA pertaining to income from vested arfs is to be changed.

If implemented it does suggest that the PRSA holder can postpone taking benefits from their PRSA for as long as the like. For some this may be a useful inheritance planning asset.
 
Doesn’t really make sense as deemed distributions were brought in to stop that, as was mandatory drawdown from PRSAs at age 75.

Is the change just that a 76 year old can have a ‘live’ PRSA and contribute?
 
Sarenco said:
Do you mean the balance remains invested in the PRSA?

A lifetime pension vehicle makes a lot of sense to me. I’m sure the PA’s fees will come down given the significant level of additional assets that will come under their remit.
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The issue is the extra costs imposed by the Pensions Authority, extra admin for the pensions authority and the legislation around charges can actually make it difficult to give better deals to customers.
 
Gordon Gekko said:
Doesn’t really make sense as deemed distributions were brought in to stop that, as was mandatory drawdown from PRSAs at age 75.

Is the change just that a 76 year old can have a ‘live’ PRSA and contribute?
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I'd be hoping that the crazy rule that anything in a PRSA at age 75 is frozen is being done away with.
 
Gordon Gekko said:
Hi Steven, I thought the ‘frozen’ element was abolished a few years ago and you were just deemed to ARF it at 75?

Thanks,

G
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No, it was never gotten rid of or automatically converted to an ARF.

While the Revenue haven't come out with their notes on this yet, I suspect imputed distribution will apply to PRSAs after a certain age (probably 75) whether they are vested or not.
 
Steven Barrett said:
The personal pension plan is also being done away with from 1 January 2024.
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I read it the same way thinking that the talk was about reducing the amount of pension types but it appears that they're not going to stop folk taking out RACs. They're just not going to approve any new ones being introduced to the market.

Strange way to phase out a product but there you go.

If that's the way with RACs then I doubt we'll see the end of ARFs anytime soon.

Gerard

www.prsa.ie
 
I don't think they could remove ARFs. Too many funds in DC schemes that will need a home at retirement. Maybe they're thinking that for folk with PRSAs, it will naturally become a thing that they don't bother with ARFs and start using Vested PRSAs instead. But that won't work because the average PRSA annual charge is still 1% and you can get a lower charge on an ARF. So any ARF salesman can justify the sale of an ARF with lower charges.
 
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