Can you take out a PRSA if you have no income?

Do you need to have an income, or is there a way to open one up without one?

Yes you can open a PRSA even if you have no income and fund it through savings or something like that. I would assume that the vast majority of people would always have SOME source of income even if they are not employed (e.g. unemployment benefit/assistance, other welfare payments etc.). See the Pensions Board site for more on PRSAs:

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spouse

Well, in this case his income is his spouse, I'm looking at the long term here...

PRSA but no taxable income

You can set up and pay into a PRSA if you have no income or no taxable income. However, if you do, you obviously do not get tax relief on your contributions, and then the PRSA is bad value. You would be bettewr off saving through a 'non-pension' investment (but keep an eye on those charges).

If you will have taxable income in the future, you will be allowed to offset your past unreleived PRSA contributions against that income.

d

PRSA but no taxable income

> However, if you do, you obviously do not get tax relief on your contributions, and then the PRSA is bad value.

Not necessarily. Contributions that don't benefit from tax/PRSI/health levy relief due to not being in employment can be carried forward and relief claimed if/when subsequently resumes paid employment. Also, whether or not a pension is a prudent form of saving should primarily be assessed on the individual's need to save for retirement and not simply on whether or not tax relief applies.

PRSA but no taxable income

Blank

Fair point about carrying forward contributions for tax relief: I was trying to keep things simple, but maybe overdid it.

On your other point: if PRSA contributions do not get tax relief then they are a reasonable investment only if the proceeds will be tax-free, i.e. if you will not have enough income in retirement to take you into the tax net. If they will be taxable, then other forms of saving are probably better e.g. life assurance based saving, as the maximum tax rate will be 23%ish at on net growth.

The issue of the need to save for retirement is different: an individual should look at whether they need to save for retirement, then at what is the most suitable saving vehicle, taking into account flexibility, value for money, risk, return, and tax efficiency.

d

PRSA and no income

A PRSA is a bad option unless there is a high degree of certainty of getting tax relief on contributions at some time in the future..cause at retirement only 25% ca be taken tax free ...next €63,500 has to be invested in taxable annuity or in an AMRF where you can't touch the capital until 75!

The Pensions Board very irresponsibly in my opinion keep bleating on about paying into a PRSA even if you're working in the home or currently unemployed..but as I said this is very dodgy advice unless you have a high chance of returning to non pensionable employment at some stage in the future and then pick up the tax relief.

As mentioned in this topic:



the fact that tax relief/deferral may or may not be possible should not necessarily blind anybody to the fact that the primary purposes of a pension fund is to save for retirement. I guess that this is the point that the PB are trying to impress on people - that they need to consider how they are going to fund their retirement given that state contributory and non-contributory pensions are unlikely to meet most peoples' needs...