PRSA’s: Pensions & Personal Retirement Savings Accounts

The importance of having a pension

Retirement planning is all about building a fund to provide for you and your dependants when retirement age comes. If you do not have your own pension arrangements in place, you may be limited to depending upon the State Pension benefits to provide for you in retirement. The state pension is only available to those who have sufficient credits accumulated to qualify.

The current State Pension (Contributory) is €238.30 per week (as at March 2017. Source: www.citizensinformation.ie) for an individual with no dependants. As the working population in Ireland is getting older there is no guarantee that the State will be financially in a position to continue providing pensions in their current format, and there is a good possibility that the state retirement age could be pushed out past age 70.

When should you start saving for retirement?

The simple answer is as soon as possible. The earlier you start, the easier it is to save for your target income at retirement. Delay can have a dramatic effect. The later you start, the more you will have to save each month.

Making adequate provision

The good news is that we can all expect to live longer; an individual currently aged 65 can expect to live for another 21 years if female and 18 years if male (source: CSO, 2015). Making provision for an adequate retirement income is essential to ensure you enjoy a comfortable standard of living during your later years. Remember, the longer your retirement will be, the more capital you will need to have put aside to supplement your income.

Tax Relief on your Contributions

The Early Childhood Ireland PRSA Scheme which is run in conjunction with Kidd Insurances is very tax-efficient.  As your contributions are made directly from your pay before tax, you receive immediate tax relief at your highest rate.

Employers Pension Obligations:

Under the pensions act an employer must appoint a designated PRSA provider and is obliged to:

• notify all employees’ that they have a right to contribute to a Standard PRSA;
• allow the PRSA provider or intermediary reasonable access to all employees at their workplace;
• make deductions from payroll at the request of employees and remit these to the designated PRSA provider.
• advise employees in writing (normally on their payslip) at least once a month of their total contribution including the employer’s contribution, if any have been forward on to the pension provider.
• The employer is not obliged to make contributions on behalf of their employee however they must facilitate any personal contributions that an employee wants to make towards their pension.

Kidd insurances can help you comply with your obligations:

You can log onto https://www.kiddinsurances.ie/prsa/ and register to have a PRSA provider appointed, or you can contact Kidd insurances directly on 01 2079400. We will provide you with a step by step guide as to your obligations, and they will help you implement the pension for you and your employees.