Auto enrolment and PRSA

[Jordan Belfort]

My wife has a PRSA arranged and receives tax benefits on contributions as filed in Form11. Here employer was not involved at all in the PRSA and basically has nothing to do with it. Our preference would be to stay on PRSA and continue to get tax relief on contributions and not get involved in AE scheme at all.

Will we be able avoid auto-enrolment because she has a PRSA ?
If so is it her employer or herself that has to opt her out ? How does the employer even formally know she has a PRSA ?
I see mention of only opt-out after 6 months and auto-re-enrolment after 2 years ? Is this correct ?

 

[Protocol]

Surely people will want to join the AE scheme to receive the er cont and the State contribution?

Why look a gift horse in the mouth?

You are free to have your own PRSA also.

 

[Jordan Belfort]

Surely people will want to join the AE scheme to receive the er cont and the State contribution?

Why look a gift horse in the mouth?

You are free to have your own PRSA also.

Maybe not if you want to max contribution (30% over age 50) with tax relief at the marginal rate so in effect paying 15% and getting a government 'gift' of 10%. The AE would be a contribution of 1.5%, then 1.5% from employer and 1% from government without tax relief.....Think the PRSA would suit us better.

 

[Towger]

The AE system is still years away. As things stand, employers will have nothing to do with the operation of AE, they will be told to Start/Stop collecting and the percentage to collect. If 'the system' does not pick up the fact she has an PRSA with a 3rd party she will be AE'ed and it will be up to her to contact the CPA (Central Processing Authority) to opt out.

 

[Steven Barrett]

As AVCs aren't allowed, we are still waiting to hear on what exactly people can do if they want more than 3% of salary paid into their pension. Then there is the disparities in tax relief under the existing pensions versus AE. There's still a lot to be ironed out as to how exactly this thing is actually going to work. Will employers start contributing to PRSAs for their employees instead? The retirement age for AE is the State pension age. You can access your PRSA or MT from age 50 in certain circumstances. A big difference there.

 

[Dave Vanian]

The AE system is still years away.

Agreed. As @Steven Barrett says above, the important detail on how the system will work hasn't been figured out yet. It's not yet known who will get the contract to run the scheme. The idea that it can all be figured out and a brand new processing company of sufficient size and scale to handle 800,000 customers built from scratch by January 2025 (which is the Minister's latest prediction) is fantasy.

Anyway, when it eventually does happen, there will inevitably be some bad publicity about it from employers who are forced to take on the additional cost and administration, probably start-up teething problems etc. Does the Government want to have that just before an election? I doubt it.