Pension or no?

Got the info needed, thanks!

ionapaul said:

I have done so before, but have heard 'don't start a pension until you own a property' many times so avoided making a decision. Additionally, I have only been back in Ireland a few years after spending 4 years completing a post-grad and working in the States, and plan to move on (perhaps to England) within a year or two. I certainly always need the ability to up sticks and change countries / careers if the desire takes me.

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Do you plan on buying a property here? If not then saving for one is presumably not a priority so, in the absence of any other urgent savings/investments requirements (e.g. debt reduction or funding other short/medium term plans), perhaps a pension would be a good idea.

Is there anything like a Roth IRA available in Ireland? I don't want anything linked to any employer, and would prefer some control over where the money is invested (mutual funds, etc...). Or should I hold off until I make a decision on a) where I'm going to live and b) what I'm going to do, both of which might be a decade or more away from becoming clear!

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I don't know what a Roth IRA is other than some sort of US Investment Retirement Account. A PRSA is not linked to your employer - it is a Personal Retirement Savings Account. If it's more a case of managing your own pension funds more directly than normally provided for then in some circumstances an SSAP (Small Self Administered Pension) might be the answer but there may be restrictions on how much is needed and who can do this (self employed only?).

Have you considered contacting an independent, professional financial intermediary (e.g. authorised advisor or good multi-agency intermediary) to get a full financial review/fact find/health check done? Could be money well spent.

The closest thing we would have to an IRA here is a [broken link removed] I believe (they've only come in the last couple of years).

One of the main reasons for having a pension as opposed to general savings for your retirement are the tax incentives. If you're not going to be earning an income here, then you don't get this benefit.

I have decided to go ahead and open a PRSA with a one off contribution - I paid €Xxxx in the higher rate of tax last year - since I have that amount lying around in a savings account and don't foresee the need to touch it, shouldn't I just pay this amount as a lump sum into the PRSA? I don't plan to set up a regular contribution, just pay lump sums in every year.

If I do that, how do I go about claiming back the 42% relief from revenue? I think the revenue have already had a gander at my 2005 taxes (I claimed some medical expenses back from them last month), will this adversely effect my claiming PRSA relief on 2005?

ionapaul said:

I have decided to go ahead and open a PRSA with a one off contribution

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Make sure that the charges are competitive. It should be possible to get a PRSA with only a 1% annual management charge for the payment of a once off arrangement fee of a a few hundred (at most) € to an execution only discount broker. Of course you can also get personal pension plans with similar charges - e.g. from and most likely others too. Shop around!

I paid €Xxxx in the higher rate of tax last year - since I have that amount lying around in a savings account and don't foresee the need to touch it, shouldn't I just pay this amount as a lump sum into the PRSA?

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You can pay up to the relevant age related gross income percentage and claim full tax/PRSI relief on it. See . You can do this in respect of the previous year's earnings if you make the contribution before October 31st in the current year (and obviously if you have not already used up your pension tax relief limit).

I don't plan to set up a regular contribution, just pay lump sums in every year.

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Making regular contributions might be a little more prudent due to so called .

If I do that, how do I go about claiming back the 42% relief from revenue?

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Just write to Revenue with evidence of payment (e.g. copy of your PRSA1 certificate and/or receipt of payment) and a copy of your P60 for last year and ask them to review your affairs in order to grant you tax relief. PRSI relief must be claimed separately - see here.

Thanks Clubman - I have emailed Quinn Life to find out what exactly is the difference between their personal pension (Freeway Pension) and PRSA offerings...I cannot see much of a difference at all! If anyone has a thought on this, I'd appreciate it, as I'm sure the good folks at Quinn Life will tell me whatever they can to get me to sign up

I agree that regular contributions would be more prudent, but will go for the lump sum payment to begin with, simply to take advantage of last year's relief and also because I am currently unsure whether I will live in Ireland for the next few years and so don't really want to set up a regular contribution if I am not getting any tax relief, given as I will not be paying any in this jurisdiction for that time.

QL don't offer PRSAs. As far as I know the main/only different between the QL personal pension plans and PRSAs is that the normal portability rules that apply to PRSAs will not apply to the personal pension plan. Note also that QL are just one provider of low cost personal pension plans. There may be others so shop around. Note that with most pensions these days you can stop, start or vary regular contributions without penalty as you choose (e.g. stop if you would not benefit from tax relief). One thing to note is that regular contribution plans may levy the monthly policy fee (usually c. €5) even when no contributions are made (they do this by cashing in units in necessary) whereas lump sum plans will not.