Company Pension and personal PRSA?

P

Phibs

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Hi

I have just moved jobs and my employer has a company pension which they will contribute 5% of my salary to when I have completed my 6 month probationary period. I was hoping to start a separate PRSA myself - is this allowed?? I heard somewhere that you were only allowed pay contributions to one scheme at any time.....
Thanks!
 
You can have as many pensions as you want at any time - subject to age-related contribution limits and keeping within funding limit.

A DC pension with just 5% going in sounds very small, regardless of your age so you'd be well advised to consider additional provision. However, do be sure that it's appropriate for you to start now rather than later i.e.
  • are you currently a lower rate taxpayer but expecting to move up into the higher bracket relatively soon? (in which case you should wait to start a PRSA because tax relief on contributions is worth over twice as much to a higher rate payer)
  • have you bought a house yet?
  • are you carrying non-mortgage debt?
 
Is it not the case that if an occupational scheme offers an AVC facility then you must choose that rather than opting for a something separate like a PRSA or a personal pension plan for AVCs?
 
If you're a member of an Occupational Pension Scheme and have no other source of income, you can choose to pay AVCs to the existing scheme's AVC facility (assuming it has one) or start your own AVC PRSA. You should evaluate both in terms of fund choice, charging structure etc., before choosing between them. The existing AVC facility will have a small administrative advantage that it will be deducted from salary and therefore you'll receive immediate tax and PRSI relief. With a standalone AVC PRSA you'll need to claim these reliefs yourself.

Regardless of your choice your contributions are still governed by the usual age-related rules for tax relief (including any existing employee contributions to the main scheme) and total maximum funding rules (unlikely to be an issue in this example.)

Liam D. Ferguson
www.ferga.com
 
Thanks all! Am expecting to move to higher tax rate very soon, have a mortgage, but very little non - mortgage debt (only about € 10k in a CU loan which I kill about € 800 per month)....Think I may wait and make the contributions to the company scheme when I am entitled to do so....I can pay in as much as I want.....in the meantime...I'll try to save what I will put in.....hmmmm! never easy this lark!
 
Don't forget that you get PRSI/health levy relief (up to 4% + 2%) and not just tax relief (20% or 41%) on pension contributions up to your age related pension tax relief limit.
 
In the context of taking out a PRSA, am I correct in thinking that a Civil service pension is an Occupational Pension Scheme, but the state Old Age Contributory Pension is not. So an individual who has retired from the Civil Service, and is working part time and making PRSI contributions, can take out a standard PRSA.

Thanks
 
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