Is newemployer obliged to make payroll deductions to a PRSA?

A

ajapale

Guest
A friend of mine set up a PRSA about a year ago. Her then employer facilitated her by making payroll deductions (but did not make any matching contributions).

She is now considering moving to a new employment. Her potential new employers have told her that they will not facilitate her with payroll deductions. (they have one dedicated provider of PRSA and have a policy to only make deductions for that company). My friend does not want to switch funds.

I thought that the new employer was legally obliged to faciliate payroll deductions. Am I right?

ajapale
 
PRSA deductions

No, you are not right. An employer is obliged to make a standard PRSA available, but the employer gets to choose which one. The employer does not have an obligation to facilitate your friend's choice.

If she feels really strongly about it, she should set up a PRSA with the employer's chosen provider and cease contributions to her current PRSA. Every so often (say once or twice a year) switch the proceeds of the employer PRSA into her current PRSA. Then start a new PRSA with the employer's provider and repeat. Neither PRSA provider is allowed charge for the switch.

d
 
Re: PRSA deductions

thanks d53,

That seems like a reasonable workaround.

ajapale
 
Re: PRSA deductions

> I thought that the new employer was legally obliged to faciliate payroll deductions. Am I right?

Only if they don't provide other pension cover (e.g. an occupational scheme) to all employees and then (as above) only to a PRSA arranged with (one of) their authorised PRSA provider(s).

> Every so often (say once or twice a year) switch the proceeds of the employer PRSA into her current PRSA. Then start a new PRSA with the employer's provider and repeat. Neither PRSA provider is allowed charge for the switch.

Is this allowed (e.g. is it possible to have multiple PRSA accounts at any one time) and if it is what is the benefit? I would have thought that the main benefits available with a standard PRSA that you set up yourself rather than one arranged through the employer's PRSA provide is that you may be able to get lower charges than the 5% on each contribution and 1% annual management fee (e.g. 0%/1% instead of 5%/1% is possible for an up front arrangement fee) and perhaps a "better" selection of funds. Assuming that most employers' PRSAs will probably charge the full 5%/1% transferring into a 0%/1% "personal" PRSA is of no benefit on charges since the 5% of each contribution is already gone.

Am I making any sense there ....!? :eek:
 
PRSA workaround

Blank

You are right about the employer's obligation, but it seems clear in this case that there is no pension.

What I suggested is allowed: there is no limit on the number of PRSAs that you can have. In the normal course of events, there is little or no disadvantage, as most PRSAs are bog-standard. If you find a cheaper one, yes, put all your money in there.

You are right, if PRSA Y is cheaper than PRSA X, then this approach will not make sense: better to forego the employer deduction altogether and pay directly to PRSA Y. Ajapele's friend should check this out.

d
d
 
Re: PRSA workaround

Thanks for the further information.

You are right about the employer's obligation, but it seems clear in this case that there is no pension.
Click to expand...

I checked and in this case the company has an occupational pension scheme (DB) which is closed to new members. They offer their designated PRSA provider to new entrants.

As an aside these PRSA's are not proving to be very portable are they? I thought this was the idea that people who were mobile and on short term contracts would be able to make easy payments to their own PRSA.

ajapale
 
Re: PRSA workaround

> As an aside these PRSA's are not proving to be very portable are they? I thought this was the idea that people who were mobile and on short term contracts would be able to make easy payments to their own PRSA.

They ARE portable - I moved mine from standalone to be included under my employer's payroll system without (much) hassle. The issue of whether or not going standalone or through the employer due to charges or the possibility of foregoing versus availing of employer contributions is arguably separate from the portability issues covered by the legislation.
 
What do you understand by *Portable*?

Hi <>,

What do you understand by "portable" in a pensions sense? Is it portable between providers? Or is it portable between employers?

For PRSA's to have real value for people who make several career changes it is essential that they can carry their personal pension and set up deductions with the minimum of fuss.

ajapale
 
What do you understand by *Portable*?

> What do you understand by "portable" in a pensions sense? Is it portable between providers? Or is it portable between employers?

Both. Your PRSA IS portable. However the fact that if you transfer into your employer's scheme you (a) may have to change to another provider (b) may face different charges and (c) may benefit from employer contributions are all separate issues that you personally need to weigh up (in cooperation with an independent, professional advisor if necessary) when deciding what to do.

I would agree that pensions in general are still quite complicated and, in general, independent, professional advice is often required in order to make informed and appropriate choices.
 
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