Part time empl, low income. is PRSA still worth the effort?

5

50andOut

Registered User
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Hi All

Interested in people opinions, My wife started part time work last year earning just 11.5k p.a. Her employer will match pension contributions into a PRSA up to 6%.

The provider they are using has sent the information through and there is a 5% contribution charge and 1% annually mgmt chg.

I remember reading some info before on contribution rates and advising you should be able to get 100% contribution, but figure for such a low salary/pension contributions this is harder to achieve and am just wondering is it orth the effort. I am assuming it's essentially still free money even if small and getting the small allocation hit?

Tnx in advance
 
If your wife puts in €600.
Her employer will put in €600
Total €1,200
5% contribution charge is €60
Net contribution: €1,140

She gets 20% tax relief on it, if I understand the taxation of married couples correctly. So that is €120 tax back.

So the net cost is €480.

It will grow tax-free.
Depending on her income in retirement, she could get it back tax-free.

Well worth it.

If her employer offers to pay her the €600 as gross salary, she might be better off taking that.

Brendan
 
Thanks, pretty much word for word what I said also, but thought it was an interesting question and good to see a confirming view.

Are there any suggestions on how to get 100% allocation? The PRSA provider is suggesting 1 of 6 predefined funds, I suggested asking is there a self directed option with 100% allocation. thinking it cant hurt to ask. assuming its the right question.

cheers
50
 
Another question here.

The tied financial advisor of the provided Company's PRSA advises he is obliged to perform a financial review.

Why is this?
 
You can get 100% allocation if you buy the product on an execution only basis - no advice on provider, product or funds.

All intermediaries (tied or otherwise) have to complete a financial review if a client is looking to buy a product where they need financial advice. The Regulator says so, and it protects the client (and intermediary) if there's a dispute over the advice in the years ahead . The information contained in the review forms the basis of the advisors recommendation. You could sign a waiver to say that you don't want to do the review.

Gerard

www.prsa.ie
 
thanks Gerald. This advisor has advised execution only is not available, he also insisted the review was required, (this is the 2nd one as initial one was over 3 months ago). I just requested the list of fund options and said I will pick one directly.

Doesn't seem much option, which is why I was wondering if you can set up your own PRSA and request company to pay into that rather than the one they offer.

tnx
 
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