PRSA or ETF investment

[Premos]

We currently have a lump sum in excess of 150k that we need to invest.
Early 50s, both maximising pension, no debt, mortgage free on 2 properties (one rented).
Thinking about retiring in about 10 years. No earlier plans.
While we will probably also invest in some shares directly, our first move was to look at ETF products managed by an insurance company with funds that are similar to some PRSA.
I have a couple of PRSA as I am self-employed. However, as my income is very low and I started to invest in my pension only a few years ago, the chance of me paying more than 20 per cent tax in retirement is fairly slim and in 10 years, my personal pension pot would probably not exceed 150k if I stay in my current occupation. I was wondering if it would be an idea to put some of this money (perhaps 50K) in a new PRSA. If I continue in my current occupation, I would be able to slowly get the tax relief on a yearly basis. If I was to change occupation in some point, I would pay a maximum of 20 per cent tax (after a free lump sum) on the investment instead of 41 per cent on the gain. Could that make sense or not at all?

 

[ClubMan]

I don't understand...

Early 50s, both maximising pension,

I was wondering if it would be an idea to put some of this money (perhaps 50K) in a new PRSA.

How is exceeding your age related tax relief limits going to be beneficial overall?

Maybe this thread might be of relevance?

Key Post - Contributing to DC pension in excess of tax relief limit

Hi, I have excess funds that I would like to invest in shares (I have a rainy day fund in place, tracker mortgage 20yrs/ €300k that I overpay each month and a mortgage free investment property) my DC pension is 650k and 80% equities with Zurich and blackrock. I am 45 with no dependents and...

www.askaboutmoney.com

But I suspect that you might need to post more details, including specific figures, about your overall financial situation. E.g. what a Money Makeover might cover...

Key Post - Basic information required for the "Money Makeover" forum

It can be difficult, but please try to use a meaningful title in your thread For example "27 year old with mortgage arrears". You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...

www.askaboutmoney.com

 

[Premos]

How is exceeding your age related tax relief limits going to be beneficial overall?

I was more thinking that it would be frontloading my pension contributions.

 

[S class]

If you retire at age 60, will your only income be rental and possibly ARF drawdowns ?

You will lose your PAYE / earned income tax credits if your only income is rental.

You would have the possibility to make use of your PAYE credits from ARF drawdowns. Currently there is 2k PAYE credits.
You could drawdown 10k per year tax free from your ARF.

This advantage will exist up to the time you claim the COAP.

It could be worthwhile having extra PRSA contributions.

You are correct that front loading your PRSAs is advantageous.

 

[Premos]

If you retire at age 60, will your only income be rental and possibly ARF drawdowns ?

Yes, at retirement, before 66, my only personal income would be rental (if we still have it) and ARF.
The idea was also to try to maximise my tax credits.

 

[S class]

The idea was also to try to maximise my tax credits.

Increasing your PRSA contributions is a good idea so.

If your rental ends at age 60 you will be able to drawdown 20k per year from your ARF, tax free, up to age 66.