PRSA, work scheme or nothing?

Hi guys,

I was hoping to receive some advice in respect of pensions (and to bounce a few ideas off people). Basically, I have no pension. Myself and my other half own our own home and have a reasonable amount or equity in same. We also own an investment property which more or less covers its costs and which (bizarrely you may think) is appreciating in value at an impressive rate. There is a company scheme where I work but I haven't enough service to join (as yet). Next year I will. My employer will match my contributions up to 5% of my gross salary for the year. After preliminary discussions, I think they'd do the same with a PRSA. I see the PRSA route as the best for me as long term I see myself being self employed rather than an employee. However, my other half is one of the lucky ones on the pensions front. She's a reasonably high earning civil servant so she's guaranteed her defined benefit pension and lump sum. Plus we've maximised her entitlements through notional service purchase etc. I'd be confident that we could live on her pension (plus our State pensions, rental income and deposit interest/dividends) when we retire. But should I set up a PRSA too? And are the discount brokers mentioned on this site still around. I'd be worried about dealing with someone who in 30 years time may not be still in business...if I set up an Eagle Star/Zurich Default Investment Strategy PRSA with X Ltd, are all my future dealings with Zurich? I'd be happy with the DIS - it makes sense and I've no urge to try and second guess the markets myself. I'd estimate our needs on retirement to be (say) €80,000 per annum gross in today's terms. In my view a debt free couple with their own home, an investment property and €80,000 (total) income (in today's terms) would be more than comfortable or am I being naive or missing something? If I'm not then I think we'd be in that situation without me doing anything on the pension front so should I bother? I know the value of the tax relief etc but I could go another route and invest in BES schemes or similar.

Thanks in advance for any input.

John Rambo said:

I'd be worried about dealing with someone who in 30 years time may not be still in business...if I set up an Eagle Star/Zurich Default Investment Strategy PRSA with X Ltd, are all my future dealings with Zurich?

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If you set up a PRSA with Zurich with 100% allocation through a discount broker, your contract document will show 100% allocation and the contract is between you and Zurich. So even if the broker who sets it up goes out of business the day after you set up your PRSA, it has no effect on your contract. You deal directly with Zurich.

Liam D. Ferguson

John,

You'd need to clarify if your employer will make contributions to a PRSA. If it is a large company or a company in expansion, then they may not want the hassle of trying to accommodate individual staff members - payroll deductions etc.
Rather than setting up a PRSA on a whim only to find out your employer will only contribute to their establised scheme, it is worth clarifying this first. Either way, don't ignore the employers contributions as they too should grow with your salary and position as you earn promotions etc.

Do you know if the scheme at work is a standard PRSA or an occupational pension scheme with trustees etc? These things are important when it comes along to retirement options.

At the end of the day, it sounds like you are off to a good start already. Keep up the good work!

Bob