Hi,
I'm looking for some advice here regarding the title of this thread.
Some background on myself, I am 31. I had been working in a permanent job with my employer paying into a pension. I had 20,000 in the pension last year when I left the job. I transferred the funds from that company scheme into a personal retirement bond with aviva. At the time I had done some research and read this was the best thing to do. Was I correct in that decision?
Anyway, I started working last year as a professional contractor in my profession. I have been setup as a director of an umbrella company. At the time I started contracting I spoke with a financial advisor from a very well advertised crowd and they suggested setting up a retirement annuity contract (RAC) since I wasn't going to have any employer contributions to the pension. Tbh, I didn't fully research these at the time and took their advise. I have been contributing 500 euro a month to this for the last 18 months or so. I am getting the usual 40% tax relief.
I was looking at some information on the website of the accountant I use for the umbrella company this week and noticed that since January 2023 that I could have been availing of 52% tax relief as contributions can be made from the umbrella company to the pension. I enquired with my accountant today and they said I would need to setup a PRSA to avail of the 52% tax relief and make employer contributions.
I was doing the maths on it and I could increase my contributions to around 700 euro per month and when getting 52% tax relief it wouldn't be far off the net amount 500 euro per month is costing me now.
What are the pros and cons of a RAC vs PRSA apart from the higher tax relief that I can avail of?
Any input would be welcomed.
Thanks in advance
I'm looking for some advice here regarding the title of this thread.
Some background on myself, I am 31. I had been working in a permanent job with my employer paying into a pension. I had 20,000 in the pension last year when I left the job. I transferred the funds from that company scheme into a personal retirement bond with aviva. At the time I had done some research and read this was the best thing to do. Was I correct in that decision?
Anyway, I started working last year as a professional contractor in my profession. I have been setup as a director of an umbrella company. At the time I started contracting I spoke with a financial advisor from a very well advertised crowd and they suggested setting up a retirement annuity contract (RAC) since I wasn't going to have any employer contributions to the pension. Tbh, I didn't fully research these at the time and took their advise. I have been contributing 500 euro a month to this for the last 18 months or so. I am getting the usual 40% tax relief.
I was looking at some information on the website of the accountant I use for the umbrella company this week and noticed that since January 2023 that I could have been availing of 52% tax relief as contributions can be made from the umbrella company to the pension. I enquired with my accountant today and they said I would need to setup a PRSA to avail of the 52% tax relief and make employer contributions.
I was doing the maths on it and I could increase my contributions to around 700 euro per month and when getting 52% tax relief it wouldn't be far off the net amount 500 euro per month is costing me now.
What are the pros and cons of a RAC vs PRSA apart from the higher tax relief that I can avail of?
Any input would be welcomed.
Thanks in advance