Should I start a PRSA now or wait?

M

michelle68

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Hi guys, my first post here. I was wondering if anyone could advise me on whether I should start a PRSA or wait? I am currently in a company with no pension scheme other than for the Senior Management team. I have 2 very small pensions from 2 previous employers - one of whom has now decided to move my small fund into a Personal Retirement Bond, or a PRSA.

I'm wondering if I start a PRSA, is my employer obliged to provide a PRSA provider? Also, with the National Pensions Framework announced last March, whereby anyone not in a scheme will be automatically enroled into one, with employers having to make matching contributions as well as State, would I be better off waiting till then and just let my small fund sit in the Personal Retirement Bond for now?

any advice would be much appreciated?
 
Hi michelle68,

Your employer is obliged to provide you with access to some form of pension arrangement and arrange salary deduction facilities if you choose to join it. Your employer is not obliged to make any contributions to your pension.

That said, you may get a better deal on PRSA charges by sourcing your own PRSA as there's more incentive for you to find a good deal.

The scheme you mention announced in the Framework document is as yet only a suggestion. The document itself estimates that the earliest likely date for implementation is 2014. My own view as someone working in the pensions industry is that it may take far longer than that, if ever, to bring such a suggestion into reality. It will only happen if someone in Government is prepared to get behind it, push it through and battle with the various bodies likely to oppose it, e.g. trade unions, SME sector etc.

You can stop a PRSA contribution at any time without penalty so if a more attractive scheme comes along in future years you can join it.

Liam D. Ferguson
 
Liam, thank you for your reply. I went to my employer re them providing me with a PRSA which they will do no problem. However, their provider, Irish Life, has another option for me to consider. I could pay AVCs only on the existing company scheme (employer doesn't contribute). I would be most grateful to hear any comments you might have on this alternative option for me - they say it would incur lesser management fees which I believe can be pretty high on a PRSA.
 
Hi Michelle,

I suspect that your Irish Life contact person may be mistaken. I don't think you can pay Additional Voluntary Contributions to a scheme without being a member of the scheme in the first place. I'd query this point with them.
 
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