Auto Enrolment vs PRSA

F

faketales

Registered User
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My friend currently has a pension where a certain amount of her salary is paid in to. The company don’t make any contribution. It was organised and set up by her. Am I correct in saying that AE is not available in this case.

Should she stop the company making the payments and make them herself?

In this case would the company need to make set up AE for her and make the 1.5% contribution and the state make the same? She would add 1.5% also.

What are the charge rates for AE? Should she then keep the PRSA or just make all payments via AE?
 
She had the wisdom/foresight to look after herself.

IMHO, she should not do anyting until the employers hand is forced on AE, a PRSA Scheme or an Occupational Pension Scheme. Even at that, it might still be in her interest to wait on making any changes until AE is up and running for a while.

There are still a lot of questions that need to be answered on AE and employers are not fully engaged with the reality yet.

There's a handy Employer Guide To Auto Enrollment here but just bear in mind it was written by industry for industry.


Gerard

www.prsa.ie
 

Thank you for your response.

The employer is small and most (not my friend) employees make close to min. wage with no benefits. It seems likely they would go down the AE route?

From the document you linked, "All employees between the ages of 23 and 60 and earning 20k or more will have to be included in the WE scheme unless they are already in a pension scheme or making a pension contribution through payroll."

(slightly paraphrasing my c&p isn't working)

A financial advisor noted that by continuing to have the employer make deductions on her behalf (but no contribution) that the employer was off the hook for the 1.5%.

So by doing it herself and claiming tax back she would get an extra 1.5% a year. Not to be passed up. I understand she would need to match?

Could it really be the case that its a get out for employers who don't contribute?!
 
Just wondering if there has been any clarity on this. My friend now makes the contributions herself as the employer made a mistake in the past.

While they know she has a pension does that give them an out? In 10 years the employer should be contributing 6%. Don’t want to leave that behind but the government contribution is not as tax relief
 
She has to be enrolled in the AE scheme now by employer. She doesn't have a choice in that.

She'll just make her own pension paid up.
 
It has now been confirmed that it is possible to have a personal pension or prsa as well as being enrolled in auto enrolment. This is a positive development as initially it was stated that this wouldn’t be possible.
 
Realcork said:
possible to have a personal pension or prsa as well as being enrolled in auto enrolment.
Click to expand...

That makes sense otherwise her company were going to be off the hook for contributions just because she had looked after herself.

It seems like it would in general make sense to have an AE scheme pension in order to receive the 1.5%.

I have use a €150 AE contribution for simplicity.

It seems it is 28.6 cheaper to get the same about into a pension.

You get double the contribution but lose out on not getting 40% deduction.


AE:
€150 + €150 + €50 =€350.00

PRSI
€350 x 40% =€140.00
€350 - €140 =€210.00

(210-150)/210=0.286
28.6%

Unless of course she can get them to add the 1.5% to her RPSA
 
The mechanics of how this will work have yet to be published, if you making contributions to PRSA via employer payroll I'm unsure how AE system will recognise that you are not in pensionable employment. There are still lots of questions but it seems positive progress is being made
 
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