Retirement Planning

Personal Pension Plan :

What is a Personal Pension Plan?

A Personal Pension Plan allows you to build up a private pension fund to help ensure a more secure and comfortable retirement.

Who can have a Personal Pension Plan?

A Personal Pension Plan is for people who are self-employed, sole traders or partners in a partnership, workers whose employer does not offer a pension scheme and workers who do not wish to join their employer’s scheme.

What are the benefits of a Personal Pension Plan?

Personal Pensions are very similar to Standard PRSA’s. They do not have to adhere to the same rules on charges and terms, but they offer similar benefits. A Personal Pension is a form of investment designed to help you build up money for your retirement.

What are the differences between a Standard PRSA and a Personal Pension Plan?

There are five main differences:

1.The level of charges – Under a Standard PRSA, the charges are limited by legislation. However, under a Personal Pension Plan there is no statutory maximum.

2.The choice of funds – Under a Standard PRSA, the choice of funds is relatively small (often around half a dozen options) – although it is normally wide enough to satisfy most people’s needs. However, under a Personal Pension Plan, the choice is much greater.

3.Employer involvement – If you are not offered membership of a company pension scheme, your employer must offer you the opportunity to take out a PRSA (as opposed to personal pension Plan) that the firm has selected. However, if you prefer to take out a different pension of your own choice, you may do so.

4.Employer contribution –Your employer may contribute to your PRSA (although there is no requirement for this), whereas your employer is not allowed to contribute to your Personal Pension Plan.

5.Membership of more than one type of plan – If you are (or become) a member of a company pension scheme, you may also contribute to a PRSA (and you will receive tax relief on your contributions). If you have a Personal Pension Plan prior to becoming a member of a company pension scheme, you can continue contributing to it but you will not receive tax relief on your contributions. Once you become a member of a company pension scheme you are not permitted to take out a new Personal Pension Plan.

How much can I invest?

*Subject to maximum earnings of €262,382 p.a. under current legislation.

** The 30% limit applies, regardless of age, to certain categories of person that typically retire earlier than usual, such as athletes, jockeys, etc.