Pension

J

JB ANNAE

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I was previously self employed and paying a personal pension to canada life i think around €160 pm but now i have changed jobs and i am not self employed any more and the new job is offering me a PRSA with New Ireland.

I am wondering should i stop paying my personal pension with canada life and take up the PRSA with New Ireland and is there some kind of rule that says that i have to stop paying my personal pension??

The new job will not contribute in any way to the PRSA and i am being really screwed in PRSI and Tax and rather than paying all that tax i am considering putting in a lot of money each month so as not to pay any tax as i think it would be better to put it into my pension fund.

What i am basically asking is would it be worth the change and is there much charges that i would have to pay or would it be best just to increase my personal pension if i was allowed to keep it.

If i continue to pay the personal pension i would be paying that by direct debit from my personal bank account, How would i get the tax relief from tax man??
 
Which is the right solution for you?

I wouldn't be able to say without looking at what you have and what you want in detail.

With the personal pension you can claim tax relief by dealing directly with you inspector of taxes.
 
Which is the right solution for you?

Also ... in relation to the PRSA, while the employer may have nominated New Ireland as an authorised provider I don't think that you are tied to choosing them or nothing at all. As far as I know there's nothing to stop you shopping around and choosing one that suits you and/or has more competitive charges if necessary and then transferring that over to your employer and having them remit contributions on a net pay basis to the PRSA provider that you choose. (However I'm open to correction on this!).

Note that one advantage of PRSAs funded through payroll is that tax AND PRSI/health levy relief is granted automatically whereas with a personal pension plan you need to apply for tax relief (by way of additional tax credits) and separately to the Collector General for PRSI/health levy relief (something that I'm still trying to chase up in relation to some personal pension plan AND PRSA contributions from this year and last!). This topic might also be of interest to you:
 
Re: Which is the right solution for you?

As far as I know there's nothing to stop you shopping around and choosing one that suits you and/or has more competitive charges if necessary and then transferring that over to your employer and having them remit contributions on a net pay basis to the PRSA provider that you choose. (However I'm open to correction on this!).
Click to expand...

Employer has no obligation to remit on a net pay basis to a PRSA not approved by the employer.
 
OK - I stand corrected so!

Seems a shame that you might be able to get a better deal on charges with a "standalone" PRSA (e.g. 0%/1% instead of 5%/1% on a nil commission flat up front fee paying basis) but then be forced to go with the employer's authorised PRSA provider and possibly higher charges if you want to avail of payroll remittance of contributions (e.g. in order to avail of "automatic" tax/PRSI/health levy relief) rather than continue with the "standalone" PRSA and chase up tax/PRSI/health levy relief separately...
 
Seems a shame
Click to expand...
Yes, but there are practical reasons around it too. I'll give you an example. One of my clients is a company with approx 100 staff. Each has a PRSA as the employer is willing to contribute to same.

But find me a HR person willing to handle the admin involved if each member of staff comes in with there own PRSA. Remember you have premium alterations/ cheques / leavers / joiners each month. The admin runs alot lot smoother with just one company involved.
 
Yes - I appreciate the constraints all right. I guess I'm just never satisfied! ;)
 
PRSI & Health Levy Relief can now be reclaimed by an individual where the "net pay" arrangement (i.e. salary deduction) has NOT been operated, but only with effect from 1/1/2004. For queries on this, you can ring the PRSI Refunds helpline on 1890 203070.

But the important effect of this is that an individual can now ignore their employer's nominated PRSA, choose their own (on better terms or whatever), pay it by Direct Debit and then reclaim their own tax, PRSI & Health Levy relief, thus leaving them at no disadvantage to their colleagues who are in the salary deduction scheme.

This only applies where there are no employer contributions of course.

Liam D Ferguson
[broken link removed]
 
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PRSI & Health Levy Relief can now be reclaimed by an individual where the "net pay" arrangement (i.e. salary deduction) has NOT been operated, but only with effect from 1/1/2004. For queries on this, you can ring the PRSI Refunds helpline on 1890 203070.


Does this also now apply to RAC pensions? I have been paying into RAC with pension provider I am happy with. Low charges so no need to go PRSA route if above also applied to RAC.
 
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Yes - as far as I know this applies to all pension arrangements - e.g. PRSAs, RACs/personal pension plans, AVCs etc.
 
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