Opening a Prsa when not working

[lady17]

I am asking here on behalf of a friend of mine. My friend is currently getting a disability allowance. At the moment they are paying towards a prsi stamp so they will get the contributory pension at pension age.
My friend would like to open a prsa to have a bit more cash at pension age.
At the moment they are not working but hope to have some part time work in the next few months.
They want to know can they open a prsa without being employed? They are aware they can't avail of tax benefits of a prsa unless they are employed.
They would be looking to put 100 euro per month in to start but look to increasing this once they get a job.

 

[Brendan Burgess]

There really isn't much point in contributing to a pension fund while they are not getting any tax relief on it.

If they expect to do work in the future and have an income which is taxable, then they should save their €100 a month in a bank account and contribute when they are getting tax relief.

Or when the mandatory pension is introduced, they will get a top-up from the government.

Brendan

 

[bstop]

You can open a PRSA without being employed and you can claim tax relief for the contributions in a future tax year.

 

[LDFerguson]

An individual who is not in pensionable employment is entitled to relief on contributions up to €1,525 even if the contribution exceeds the relevant age percentage limit (section 787E(4) TCA). This does not apply in the case of contributions to a PRSA for AVC purposes.

Regards,

Liam
www.FergA.com

 

[bstop]

An individual who is not in pensionable employment is entitled to relief on contributions up to €1,525 even if the contribution exceeds the relevant age percentage limit (section 787E(4) TCA). This does not apply in the case of contributions to a PRSA for AVC purposes.

Regards,

Liam
www.FergA.com

Does this mean that a person who is not in pensionable employment can get tax relief for PRSA contributions of 1525 euro if their only source of taxable income is unearned income e.g. investment income ?

Or do they need to actually be earning income (i.e. working) in an employment that does not offer a pension plan ?

 

[AAAContributor]

Or do they need to actually be earning income (i.e. working) in an employment that does not offer a pension plan ?

This is my reading of it but open to correction!

You need relevant earnings against which to claim relief.

I agree though that references that I have seen to this little nuance on websites, the language is quite loose and frequently refers to "irrespective of earnings."

 

[ClubMan]

There really isn't much point in contributing to a pension fund while they are not getting any tax relief on it.

Is that always true?
Say the have a lot of savings and make contributions to a pension from those, they don't get tax relief on the contributions (possibly later on if/when they work again) but they still presumably benefit from tax free growth of the pension investments and tax free lump sum at retirement etc.?

 

[Brendan Burgess]

There really isn't much point in contributing to a pension fund while they are not getting any tax relief on it.

If they expect to do work in the future and have an income which is taxable, then they should save their €100 a month in a bank account and contribute when they are getting tax relief.

Or when the mandatory pension is introduced, they will get a top-up from the government.

Hi Clubman

I am sure that you could construct a set of circumstances and assumptions where it would have made sense to contribute to a pension. (Close to retirement where you are definite that you will pay no tax at all in retirement ever.)

But mandatory pensions are being introduced in the next couple of years. The government will top up pension contributions. So you might as well hold off contributing until you get these top ups.

Brendan