# executive company pension or PRSA



## Rockson (17 Dec 2010)

Hi 

I am self employed director and have a limited company called "A" and I always up until now paid the contributions from my company into an executive pension. 
I recently has some reason not to use company "A" any more to conduct business (sounds dodgy but it's not ) and have stared trading with company "B" and left "A" dormant. 

So I cannot make any more contributions to the pension plan associated with company "A". I have got different advice. One piece of advice I received to set up a PRSA and weather i stayed self employed or went back to employment or had to change companies again It would not matter. That sounds great until I was told that, because of the changes in the recent budget that a PRSA would not be good for a director tax wise. So I am thinking another executive company pension.

Anybody have an opinion if I am going the right route?


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## Parkview (4 Jan 2011)

Hi Rockson
The advise that you received is not so far of the mark. Infact alot of Company directors are now going down the PRSA route with all thier contributions. The reasons are:
The company makes the contribution as per an exec plan and attracts the tax relief.
The individual creats a number of PRSA's over their lifetime so that at retirement they do not have to liquidate their entire fund as with an exec scheme but simply liquidates a PRSA as an when they require funds, taking 25% tax free and the rest into an ARF/AMRF.
Hope this helps.


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## LDFerguson (4 Jan 2011)

Following the 2011 Budget, employer contributions into Occupational Pension Schemes (including "executive pensions") are more favourably treated than employer contributions to PRSAs as they are exempt from the USC and PRSI, while employer contributions to PRSAs will be subject to the USC and Employee PRSI in the hands of the employee, an effective charge of 11%. 

Liam D. Ferguson


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## Parkview (12 Jan 2011)

Prsa's have now come of age. They would be an excellent idea for a compnay director to take out and have the company pay ALL the contributions. Take out several PRSA's up to retirement and then at retirment anly cash them in as required. Under current legisation there is nothing to make you cash in all PRSA's at retirement simply draw them as required.
The company plan at retirement would have to be totally liquidated and ARF/AMRF options exercised.


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## LDFerguson (12 Jan 2011)

Parkview said:


> Prsa's have now come of age. They would be an excellent idea for a compnay director to take out and have the company pay ALL the contributions. Take out several PRSA's up to retirement and then at retirment anly cash them in as required. Under current legisation there is nothing to make you cash in all PRSA's at retirement simply draw them as required.
> The company plan at retirement would have to be totally liquidated and ARF/AMRF options exercised.


 
A fair point on retirement options, but following the Budget a *very* expensive flexibility as the Employee PRSI and USC on Employer contributions to a PRSA would cost 11% of the contribution compared with 0% via an Occupational Pension Scheme.


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