# Starting a PRSA Civil Servant 43 years service



## TOMBSTONE (11 Feb 2008)

Hi All. 

Due to retire in 2009 with 43 years service (pressganged as a child)Heard about PRSA recently but not sure what the best approach is.  Are they self administered. Any advice on the best way forward would be welcome. What to look out for, Where are the traps or pitfalls? I know you get 40% tax back and possibly some social insurance. Can money be lodged into a special account and can it be accessed at 60 and it I take up part time work can i continue to contribute untill I am 65. 

Regards

Tombstone


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## Fisher Black (12 Feb 2008)

A PRSA is not self-administered, it is administered by the PRSA Provider
Look out for one with good, clear charges and - if necessary - good clear and practical advice from the financial advisor
Yes, it can be accessed from age 60
Yes, it can be transferred to an Approved Retirement Fund/Approved Minimum Retirement Fund
Yes, if you commence part-time work then you could contribute beyond age 60


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## LDFerguson (12 Feb 2008)

If your only source of income at present is your Civil Service salary, you must open a PRSA AVC.  While the limit for tax relief is 40% of salary, this only applies if you're over 60 in the tax year during which you make the contribution.  If you're 55 - 59 now, your limit is 35%.  

You (or your broker) also need to establish that the combined pension from the Civil Service and from your AVC PRSA doesn't exceed overall Revenue maximum pension rules, although frankly these are very costly to exceed.

The retirement age for an AVC PRSA is tied to the retirement age of the main pension scheme.


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## Fisher Black (12 Feb 2008)

LDFerguson said:


> If your only source of income at present is your Civil Service salary, you must open a PRSA AVC. While the limit for tax relief is 40% of salary, this only applies if you're over 60 in the tax year during which you make the contribution. If you're 55 - 59 now, your limit is 35%.


 
These limits would probably need to be adjusted downwards on the basis that the OP is probably already contributing a % of Salary/Pensionable Salary to the Civil Service Pension Scheme of which s/he is a member.


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## LDFerguson (12 Feb 2008)

Good point - 40% or 35% _including_ any contributions already being made personally to the superannuation scheme.


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## Fisher Black (12 Feb 2008)

In relation to the OP's point about 40% tax back - this should read 41% (presuming the OP is a higher rate tax-payer) and there would also be PRSI relief (this could be 6% or 2% depending on the marginal PRSI rate paid by the OP).


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## ClubMan (12 Feb 2008)

Apropos of the _PRSA _relief issue:

Claiming PRSI relief on standalone private pension/PRSA contribution


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## oldtimer (12 Feb 2008)

My wife started a PRSA with New Ireland in 2004 when she was 55. She received her 6 month statement to-day and it decreased in value by 8.8% from July to December and has probably decreased more since. Is it not policy with Companies to put more in safer deposits as she gets older and moves nearer retirement? She is now watching her money disappear as she approaches retirement.


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## LDFerguson (12 Feb 2008)

oldtimer said:


> Is it not policy with Companies to put more in safer deposits as she gets older and moves nearer retirement? She is now watching her money disappear as she approaches retirement.


 
Only if she chose the Default Investment Strategy. Did she?  If so, what retirement age did she specify on the PRSA application?


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## oldtimer (13 Feb 2008)

To answer the above ''the default investment strategy for this PRSA product is New Ireland's range of IRIS funds.'' Also states '' as retirement approaches, the aset mix of each IRIS fund is changed gradually in order to protect the pension that can be bought at retirement.'' My wife chose retirement age at 65 years but now intends retiring much sooner than that - could be within the next 12 months. Is she stuck with it now or is there anything can be done to stop it when she reaches 60 shortly?


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## LDFerguson (13 Feb 2008)

oldtimer said:


> To answer the above ''the default investment strategy for this PRSA product is New Ireland's range of IRIS funds.'' Also states '' as retirement approaches, the aset mix of each IRIS fund is changed gradually in order to protect the pension that can be bought at retirement.''


 
While the New Ireland blurb you're quoting above does indeed describe the Default Investment Strategy, the quotes above don't confirm that your wife's policy is invested in the Default Investment Strategy. She may have chosen other fund options. This is hugely relevant to your query. 



oldtimer said:


> My wife chose retirement age at 65 years but now intends retiring much sooner than that - could be within the next 12 months. Is she stuck with it now or is there anything can be done to stop it when she reaches 60 shortly?


 
If she chose 65 and is invested in the Default Investment Strategy, the fund I think she's in is called the IRIS 2014-2015, as she wil hit 65 in 2014. This fund is currently invested 75% in equities and 6% in property, explaining much of the recent drop. 

She can switch funds (for example switch out of IRIS and into Cash) or withdraw her benefits at 60, but in doing so, she will effectively be realising her loss to date and will not participate in any recovery. 

Is there any chance she can hang on and NOT cash in at age 60?


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## oldtimer (14 Feb 2008)

Thanks for responding and your valuable information. It is Default Investment Strategy - I notice it written on the correspondence received this week. It is in Retirement Fund 2013 (6P). My wife can hang on and not cash in at age 60. Are you saying she can retire and just leave it untouched until she is 65, and hopefully markets will recover by then. I rang New Ireland yesterday but nobody was available to answer my queries. Again your assistance is very much appreciated.


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## LDFerguson (14 Feb 2008)

As at December 2007, the Retirement Fund 2012 - 2013 is 59% equity, 3% property,  31% fixed interest securities and 7% cash.  Over the next four or five years, the fund manager will be attempting to reduce the equity exposure so that by the time 2013 comes, it will probably be all fixed interest and cash.  So it won't be exposed to stock market turbulence and sudden drops just before she draws her benefits.  

Yes she can stop making contributions at any time, but leave her existing fund invested until 65.  As it's a PRSA, there's no charge or penalty for doing this - she'll simply pay the normal annual fund management charge.


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## Fisher Black (14 Feb 2008)

*H*
Hi Oldtimer - the Asset Splits below (as at 31 December 2007) provided by the investment manager (Bank of Ireland Asset Management) should give you a good idea how your wife's asset split in her PRSA should change over the next few years...for example at 31 December 2007 the split for someone due to retire in 2009 is shown by "Retirement Fund 2008-2009" in the table and you will see that it is 77% Fixed Interest Investments and 23% in Cash.
*7*
*Equities % Property % Fixed Interest % Cash %*
*Retirement Fund 2007 0 0 77 23*
*Retirement Fund 2008 - 2009 0 0 77 23*
*Retirement Fund 2010 - 2011 32 2 51 15*
*Retirement Fund 2012 - 2013 59 3 31 7*
*Retirement Fund 2014 - 2015 75 6 16 3*
*Retirement Fund 2016 - 2017 80 6 11 3*
*Retirement Fund 2018 - 2019 85 4 9 2*​*Retirement Fund 2020 Onwards 89 3 6 2*


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## oldtimer (15 Feb 2008)

My sincere thanks to LDDerguson and Fisher Black for the above information. Am now very clear re PRSA. My wife has decided to stop contributions and leave until 65.


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## lawdie (17 Feb 2008)

oldtimer said:


> My wife has decided to stop contributions and leave until 65.



With the current sentiment and equity values in world markets, should she not continue to capture fund units at lower values and change the strategy in the next five years to a more deposit styled fund?


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